Sound Energy PLC Heads of Terms: Disposal of Italian Interests (7497S)
05 October 2017 - 5:15PM
UK Regulatory
TIDMSOU
RNS Number : 7497S
Sound Energy PLC
04 October 2017
5 October 2017
Sound Energy plc
("Sound Energy" or the "Company")
Heads of Terms
Creation of Coro Energy plc through the combination of Sound
Energy Italy with Po Valley Energy Ltd and Saffron Energy plc
Sound Energy, the African and Italian upstream gas company,
notes the announcement made this morning by Saffron Energy plc
("Saffron") and is pleased to announce that it has entered into
non-binding conditional heads of terms (the "Heads of Terms") with
Saffron and Po Valley Energy Limited ("Po Valley") under which it
is proposed that Sound Energy disposes of its portfolio of Italian
interests and permits (the "Italian Interests") through the sale of
Sound Energy's wholly owned subsidiaries Appenine Energy SpA
("APN") and its holding company Sound Energy Holdings Italy Limited
("SEHIL") to AIM quoted Saffron (the "Disposal"). It is intended
that the Saffron shares received as consideration for the Disposal
will be distributed directly to Sound Energy shareholders.
Commenting on today's announcement, Sound Energy's Chief
Executive Officer James Parsons said:
"This transaction will provide an elegant exit from our Italian
activities thereby delivering strategic focus for our province
opening activities in Morocco and enabling Sound Energy
shareholders the opportunity to continue their participation in an
early stage consolidated but growth focused Italian E&P
company."
The Disposal, together with the grant by ASX listed Po Valley to
Saffron of a call option to acquire all of the issued share capital
of Po Valley's wholly owned subsidiary Po Valley Operations Limited
(the "PVO Option"), will result in the combination of the Italian
oil and gas portfolios of Sound Energy, Saffron and Po Valley (the
"Proposed Transaction"). Po Valley is currently interested in 53.8
per cent. of Saffron's issued ordinary share capital.
The enlarged company would be re-named Coro Energy plc
("Coro").
James Parsons, Sound Energy's Chief Executive Officer, would be
appointed as Non-Executive Chairman of Coro as part of the Proposed
Transaction and Sara Edmonson, Po Valley's Chief Executive Officer,
would assume the role of Chief Executive Officer of Coro. Key local
executive staff from each of Saffron, Po Valley and the Company
would be retained by Coro to drive the business forward.
The consideration for the Disposal, which remains subject to,
inter alia, contract, would be fully satisfied through the issue of
185,907,500 new ordinary shares in Saffron (the "Consideration
Shares").
The consideration payable by Saffron on exercise of the PVO
option would be settled through the issue to Po Valley by Saffron
of 185,907,500 new ordinary shares in Saffron (the "PVO Option
Shares").
The Consideration Shares, which would represent 50.0 per cent.
of Saffron's enlarged issued ordinary share capital following
completion of the Disposal and 33.3 per cent. of Saffron's enlarged
issued ordinary share capital should Saffron exercise the PVO
Option, would be distributed to Sound Energy shareholders through a
scheme of arrangement.
Under the Disposal, Sound Energy would agree to dispose of 100
per cent. of the issued ordinary share capital of SEHIL, the
Company's wholly owned subsidiary which holds all of the Company's
Italian Interests through APN, but would retain its economic rights
to receive the proceeds of the sale of Badile land owned by APN
(the "Badile Land"), which had an unaudited carrying value of
GBP1.6 million as at 30 June 2017, and the benefit of expected APN
Italian VAT receivables to the end of 2017 totalling EUR4.0 million
linked to Badile drilling costs (the "VAT"). Under the Disposal,
Saffron would undertake to remit the net proceeds of the Badile
Land and the VAT to Sound Energy on receipt by APN.
As at 30 June 2017 APN had unaudited total assets of GBP11.0
million inclusive of the Badile Land and the VAT. APN generated
revenues of GBP0.8 million and a loss before tax of GBP4.9 million
in the year ended 31 December 2016 and unaudited revenues of GBP0.4
million and an unaudited loss before tax of GBP14.5 million in the
six months ended 30 June 2017.
Whilst the Heads of Terms are conditional and subject to
contract, Sound Energy has agreed under the Heads of Terms to bear
50 per cent. of Saffron's costs relating to the Proposed
Transaction in the event that the Proposed Transaction do not
proceed for any reason.
Under the Proposed Transaction, Saffron would also issue James
Parsons, in his capacity as non-executive chairman of Saffron, with
warrants to subscribe for 10 million new ordinary shares in Saffron
at a price of 4.38 pence per new Saffron ordinary share, being the
closing mid-market price per Saffron ordinary share on 4 October
2017.
The Proposed Transaction is expected to require Saffron and Po
Valley shareholder approval and entry by Sound Energy into binding
agreements to effect the Disposal and the Proposed Transaction
would amount to a related party transaction for Sound Energy under
Rule 13 of the AIM Rules for Companies. Further announcements will
be made, as appropriate, in due course.
This announcement is inside information for the purposes of
Article 7 of Regulation 596/2014.
For further information please contact:
Vigo Communications - PR Tel: +44 (0)20 7830
Adviser 9700
Patrick d'Ancona
Chris McMahon
Alexandra Roper
Sound Energy j.parsons@soundenergyplc.com
James Parsons, Chief Executive
Officer
Smith & Williamson - Nominated Tel: +44 (0)20 7131
Adviser 4000
Azhic Basirov
David Jones
Ben Jeynes
RBC Capital Markets - Broker Tel: +44 (0)20 7653
Matthew Coakes 4000
Martin Copeland
Laura White
Further information on Saffron and on Po Valley can be found on
their websites at www.saffronenergy.co.uk and www.povalley.com
respectively.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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