TIDMPATH
RNS Number : 0852W
Path Investments plc
30 July 2018
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART
IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, THE
REPUBLIC OF SOUTH AFRICA, SINGAPORE OR ANY OTHER JURISDICTION IN
WHICH SUCH RELEASE PUBLICATION OR DISTRIBUTION WOULD BE
UNLAWFUL.THIS ANNOUNCEMENT HAS NOT BEEN APPROVED BY THE LONDON
STOCK EXCHANGE, NOR IS IT INTED THAT IT WILL BE SO APPROVED.
THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND SHALL NOT
CONSTITUTE AN OFFER TO SELL OR ISSUE OR THE SOLICITATION OF AN
OFFER TO BUY, SUBSCRIBE FOR OR OTHERWISE ACQUIRE ANY NEW ORDINARY
SHARES OF PATH INVESTMENTS PLC IN ANY JURISDICTION IN WHICH ANY
SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED
UNDER THE MARKET ABUSE REGULATION (EU No. 596/2014). UPON THE
PUBLICATION OF THIS ANNOUNCEMENT VIA REGULATORY INFORMATION SERVICE
THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC
DOMAIN.
Path Investments plc
('Path' or 'the Company')
Proposed Placing to raise GBP10 million to complete the Farm-In
Agreement
EIS Advanced Assurance Received
Path Investments plc (TIDM: PATH) is pleased to announce that it
proposes to raise GBP10 million by way of a placing (the "Placing")
of new ordinary shares in the Company (the "Placing Shares").
The net Placing proceeds will give the Company sufficient funds
to complete the farm-in agreement (the "FIA") with 5P Energy GmbH
("5P Energy") in relation to the proposed acquisition of a 50 per
cent. Participating Interest in a producing gas field, the
Alfeld-Elze II Licence and Gas Field in Germany. The effect of the
FIA is that Path will be cash generative from completion.
The Company intends to join the dividend list in the first half
of 2019.
The terms of the Placing including the number of Placing Shares,
the Placing price and allocations are at the discretion of Cantor
Fitzgerald Europe ("Cantor Fitzgerald") which is acting as joint
financial adviser, broker and bookrunner and a further announcement
confirming these details will be made following the conclusion of
the Placing. Shard Capital ("Shard") is acting as joint financial
adviser and broker in the transaction.
EIS and VCT status
Path has received advanced assurance from HMRC that the Placing
Shares are capable of being a "qualifying holding" for the purpose
of investment by an investor seeking EIS relief. The Company also
anticipates subscription by VCTs in the Placing Shares should be
regarded as a subscription in eligible shares and form a qualifying
holding under the relevant legislation, however HMRC has informed
the Company that it no longer considers speculative advance
assurance applications pending confirmation of the names of the
VCTs who are considering an investment.
Placing Shares that are allocated to EIS and VCT investors will
be limited to funds not exceeding GBP5 million in order to not
exceed the maximum amount that can be raised annually through risk
capital schemes.
Overview of the FIA and Use of Funds
-- The Company announced on 15 December 2017 that Path had
entered into a conditional farm-in agreement with 5P Energy in
relation to the acquisition by the Company of a 50 per cent.
Participating Interest in the producing Alfeld-Elze II Licence and
gas field in Germany.
-- Completion of the FIA will occur as soon as practicable
following Admission, however the economic benefits and obligations
of the FIA transfer to Path on the effective date of 1 January
2018.
-- Following completion, Path will acquire a 50 per cent.
non-operated Participating Interest in the producing onshore
Alfeld-Elze II gas field located approximately 22 kilometres south
of Hanover in Niedersachsen, Germany and covering a total of 64.6
square kilometres.
-- Existing current gross production from the first vertical
well, H-WD Z2, is approximately 84.0 Mm3/d (c. 3.0 MMscf/d),
amounting to approximately EUR4 million of gross annual
revenue.
-- Between 1 January 2015 and 31 March 2018 the H-WD Z2 well has
produced a cumulative 85.5 MMm3 (3.0 bcf) of gas.
-- The re-drilling of a second well at Alfeld-Elze II, the A-EZ
Z4(2) well was completed in February 2018 and subject to testing,
final approvals and commissioning, production from A-EZ Z4(2) is
anticipated to commence in H2 2018 and will be funded to production
by the net proceeds of the Placing ("Phase 1").
-- Path's competent person's report estimates gross 2P reserves
of 560 MMm3 (19.8 bcf) and gross 2C (mid) contingent resources of
1,802 MMm3 (63.6 bcf).
-- The Second phase of the Alfeld-Elze II field development plan
includes preparatory work such as the reinterpretation of seismic
data and the development of a full field simulation model in order
to optimise the locations of further wells. This is expected to be
followed by the drilling of up to three additional new horizontal
or slanted wells, with the objective of maximising reservoir
contact and delivering enhanced production levels ("Phase 2"). The
net proceeds of the Placing will be sufficient to fund the
completion of Phase 1, which is expected to double current
production, and the preparatory work associated with Phase 2.
Pursuant to the FIA, the Company will acquire a 50 per cent.
Participating Interest in the Alfeld-Elze II Licence on the
following terms:
-- Initial Consideration of EUR5 million payable in cash by the
Company to 5P Energy on completion of the FIA as partial
reimbursement of the H-WD Z2 costs;
-- Subject to the A-EZ Z4(2) well achieving commercial
production, a cash consideration payment of EUR2 million as partial
reimbursement of the A-EZ Z4(2) costs incurred by 5P Energy prior
to 1 January 2018;
-- A 100 per cent. carry, up to a maximum of EUR10 million,
towards the costs of the drilling, logging, testing and completion
of one or more new wells and, if agreed by both Path and 5P Energy,
including the acquisition of 3D seismic over the Licence area.
Additional cash payments may become payable if certain
milestones are successfully met over a 5-year period following
Completion of up to EUR7.25 million payable as follows:
- EUR2.25 million on achievement of cumulative gross gas
production of 10bcf;
- EUR3 million on achievement of EUR100 million of cumulative
total gross project gas revenues; and
- EUR2 million on achievement of cumulative gross gas production
of 40bcf.
Dividend Policy
The Directors intend to commence payment of dividends when it
becomes commercially viable to do so, subject to the working
capital requirements of the Company and the availability of
distributable funds and will adopt a progressive but prudent
dividend policy thereafter.
In order to increase the flexibility of paying dividends in
future, as soon as practicable following Admission, the Board
intends to seek approval for an increase in the distributable
reserves of the Company. This increase will be achieved by the
cancellation of the Company's share premium account, subject to
Shareholder approval and confirmation by the High Court of Justice
in England and Wales.
Noting that the effect of the FIA is that Path will be cash
generative from completion, it is the Directors' intention that
Path should join the dividend list in the first half of 2019.
The Placing
The Placing Shares will, when issued, be credited as fully paid
and will rank pari passu with the existing ordinary shares
including the right to receive all future dividends and
distributions declared, made or paid by reference to a record date
falling after the date of their issue. The Company will apply for
(i) the Placing Shares and(ii) its existing issued ordinary share
capital, to be admitted to trading on AIM ("Admission"). An
admission document will be published by Path in due course. The
Placing Shares are not being offered or sold in any jurisdiction
where it would be unlawful to do so. The allotment of the Placing
Shares is not subject to shareholder approval.
Cancellation of Standard Listing
The Company's ordinary shares remain suspended from trading on
the Main Market. Cancellation of the listing of the Company's
ordinary shares on the Official List is expected to take effect on
Admission.
This announcement is inside information for the purposes of
Article 7 of Regulation 596/2014.
***S***
For further information:
Path Investments plc
Christopher Theis, Andy Yeo +44 (0) 20 3934 6632
Cantor Fitzgerald (Joint Financial Adviser, Broker and
Bookrunner)
Nick Tulloch, Pete Malovany +44 (0) 131 257 4634
Shard Capital (Joint Financial Adviser and Broker)
Simon Leathers, Damon Heath +44 (0) 20 7186 9900
IFC Advisory (Financial PR & IR)
Tim Metcalfe, Heather Armstrong, Miles Nolan +44 (0) 20 3934
6630
Cautionary statement regarding forward-looking statements
Certain statements in this Announcement are forward-looking
statements, which are based on the Company's current expectations,
intentions and projections regarding its future performance,
anticipated events or trends and other matters that are not
historical facts. These forward-looking statements and words of
similar meaning or the negative thereof, include all matters that
are not historical facts and reflect the directors' beliefs and
expectations and involve a number of risks, assumptions and
uncertainties that could cause actual results and performance to
differ materially from any expected future results or performance
expressed or implied by the forward-looking statements. These
statements are not guarantees of future performance and are subject
to known and unknown risks, uncertainties and other factors that
could cause actual results to differ materially from those
expressed or implied by such forward-looking statements. Statements
contained in this Announcement regarding past trends or activities
should not be taken as a representation that such trends or
activities will continue in the future.
Given these risks and uncertainties, prospective investors are
cautioned not to place undue reliance on forward-looking
statements. Except as required by applicable law, neither the
Company nor its advisers assumes any responsibility or obligation
to update or revise publicly or review any of the forward-looking
statements contained herein, whether as a result of new
information, future events or otherwise. You should not place undue
reliance on any forward-looking statements, which speak only as of
the date of this Announcement.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IOEGMGZNLLKGRZM
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