TIDMPXEN
RNS Number : 8130A
Prospex Energy PLC
07 February 2022
Prospex Energy PLC / Index: AIM / Epic: PXEN / Sector: Oil and
Gas
7 February 2022
Prospex Energy PLC
('Prospex' or the 'Company')
Conditional Placing and Subscription to raise GBP2.395
million
and
Notice of General Meeting
Prospex Energy PLC, the AIM quoted investment company focused on
European gas and power projects, today announces that it has raised
GBP2.395 million before expenses, through the conditional placing
and subscription of 68,428,572 New Ordinary Shares of GBP0.001 each
at a price of 3.5 pence per share, a 16.7 percent discount to the
closing share price on 4 February 2022. The fundraising was
oversubscribed and supported by existing and new institutional and
retail investors, as well as Directors of the Company and is
subject to shareholder approval.
Highlights
-- Proceeds of the fundraising will be used to:
o Acquire 20% of the Selva Field in Italy, more than doubling
the company's current holding from 17% to 37%, estimated to add 2.7
billion cubic feet ("Bcf") of 2P gas reserves to Prospex's
portfolio
o Fund the development costs of the Selva project to first gas
expected in Q1 2023
-- Full Director participation in the subscription
-- Existing shareholders who have not had the opportunity to
participate in the placing, will be able to do so now at the same
placing price through Broker Option Shares via Peterhouse Capital
Ltd (contact details below) to raise up to a further GBP0.24
million
-- Proposed removal of pre-emptive rights over 41.3 percent of
the enlarged share capital to allow the Company to capitalise on
the fast-moving opportunities within the energy sector and advance
its existing portfolio
Commenting on the placing, Mark Routh, CEO of Prospex said:
"This placing has exceeded expectations and we have surpassed
the minimum amount we needed for Selva from existing and new
investors. We have had full support from our major shareholders and
participation from all Board directors and we have closed the
placing without issuing any warrants. It will provide Prospex with
the funds needed to significantly increase our interest in the
Selva Field in Italy, fund the development costs of that project to
first gas and will enable us to fund other opportunities.
"I am particularly pleased to be offering all existing
shareholders the opportunity to participate in this placing via the
broker option at the same price as the placees in this
subscription. The broker option will be available to existing
shareholders until 16:30 on Tuesday 8 February 2022.
"Any extra funds received via the broker option scheme will
allow us to accelerate and advance work on the infill well drilling
campaign on the El Romeral concession in Spain currently waiting on
permits to drill the first three infill wells. The first two wells
to be drilled on two proven gas-bearing structures are expected to
bring the generation utilisation of the plant up to full
capacity.
"I would like to take this opportunity to thank existing
shareholders for their support and welcome our new shareholders as
we look to accelerate growth and increase shareholder value."
For further information visit www.prospex.energy or contact the
following:
Mark Routh Prospex Energy PLC Tel: +44 (0) 20 7236
1177
Rory Murphy Strand Hanson Limited Tel: +44 (0) 20 7409
Ritchie Balmer 3494
Colin Rowbury Novum Securities Limited Tel: +44 (0) 20 7399
Jon Belliss 9427
Duncan Vasey Peterhouse Capital Tel: +44 (0) 20 7220
Lucy Williams Limited 9797
Susie Geliher St Brides Partners Tel: +44 (0) 20 7236
Ana Ribeiro Ltd 1177
Background on Conditional Placing and Detail of General
Meeting
Use of Proceeds
The net proceeds of the Placing and Subscription, (being
approximately GBP2.32m) together with certain of the Company's
existing cash resources and income, will be used to enable the
Company to fund the development of its 17% share of the Selva field
in Italy and to fund the proposed 20% acquisition of the Selva
field in Italy, together with the associated 20% share of the
development costs.
In addition, any proceeds raised from the broker option scheme
will be used to fund several business development activities,
including providing funds to accelerate the planning and execution
in Q4 2022 of the first infill well in the Company's El Romeral
power project in Southern Spain through its 49.9% shareholding in
Tarba Energía ("Tarba"). If the income generated by the El Romeral
power project, which is passed onto Tarba shareholders throughout
2022, does not cover the overheads of the Company, then certain of
the proceeds may be used for general working capital purposes.
The Placing and Subscription and Broker Option are subject to,
inter alia, the receipt of Shareholder approval of the necessary
Resolutions to enable the issue of the New Ordinary Shares free of
pre-emption rights. Accordingly, the Company is convening a General
Meeting to seek Shareholder approval of relevant authorities to
allot shares in the Company and to disapply pre-emption rights.
These authorities will enable the Directors to complete the Placing
and Subscription and Broker Option.
Notice of General Meeting
The Company is convening the requisite General Meeting for 10:00
a.m. on 23 February 2022 at the Company's registered office at
Shakespeare Martineau LLP, 60 Gracechurch Street, London, EC3V 0HR
to approve the necessary resolutions in respect of the Placing and
Subscription and Broker Option. If the Resolutions are not passed,
the Placing and Subscription and Broker Option will not
proceed.
This announcement explains, inter alia, the background to and
reasons for the Placing and Subscription and Broker Option, and why
the Directors consider the Placing and Subscription and Broker
Option to be in the best interests of the Company and its
Shareholders as a whole and recommend that shareholders vote in
favour of the Resolutions to be proposed at the General Meeting,
notice of which is set out at the end of the circular to be sent to
shareholders today.
Details of the Placing
The Placing Price represents a discount of 16.7 percent to the
closing middle market price of 4.2 pence per Ordinary Share on 4
February 2022, being the last business day prior to the
announcement of the Placing and the Subscription.
The New Ordinary Shares to be issued pursuant to the Placing
have been conditionally placed by the Company and by Peterhouse
Capital Limited ("Peterhouse") and Novum Securities Limited
("Novum") (together "the Brokers") as agents of the Company, with
certain existing and new institutional and other investors pursuant
to the Placing Agreement, subject to the passing of Resolutions 1
and 2.
Under the terms of the Placing Agreement, conditional on
Admission, Peterhouse and Novum will receive commission from the
Company on the funds they introduce. The Company has given an
indemnity and certain customary warranties and undertakings to
Peterhouse and Novum in relation, inter alia, to its business and
the performance of their duties under the Placing Agreement.
Broker Option Shares
To provide existing shareholders who did not participate in the
Placing and Subscription with the opportunity to do so, the Company
will also offer "Broker Option Shares" via Peterhouse, subject to
the completion of the Placing, representing a number of Ordinary
Shares up to 10% of the New Ordinary Shares offered in the proposed
Placing and Subscription. In order to satisfy the demand for Broker
Option Shares, the facility may be increased by agreement between
the Board and the Brokers. This is a facility to allow existing
shareholders to acquire Ordinary Shares at the Placing Price after
the Placing and Subscription have closed. The Company and the
Brokers will prioritise valid orders from existing shareholders. As
far as is practical, participation in the Broker Option Shares will
be prioritised for shareholders (direct or indirect) on the
register at the close of business on 4 February 2022.
The broker option will be available to existing shareholders
until 16:30 on Tuesday 8 February 2022.
The Broker Option Shares will rank pari passu with the Company's
Ordinary Shares and the New Ordinary Shares.
The ability of the Company to offer Broker Option Shares is
conditional on the passing of the Resolutions.
To subscribe for Broker Option Shares, investors should
communicate their bid to Peterhouse via their stockbroker as
Peterhouse cannot take direct orders from individual private
investors. Existing Shareholders or other interested parties who
wish to register their interest in participating in the Broker
Option Shares should instruct their stockbroker to call Peterhouse
on STX: 76086 or 020 7469 0938 or 020 7469 0936 or 020 7220 9797.
Each bid should state the number of Broker Option Shares the
investor wishes to subscribe for at the Placing Price.
Directors' participation in the Subscription and Related Party
Transaction
The following Directors are subscribing for New Ordinary Shares
pursuant to the Subscription for an investment, in aggregate, of
approximately GBP0.135 million. Their subscription for New Ordinary
Shares is taking place on the same terms and conditions as the
Placing.
Director No of New Ordinary Resulting holding Resulting % of
Shares subscribed of Ordinary Shares Ordinary Share
for pursuant Capital following
to the Subscription the Placing and
Subscription
William Smith 430,000 5,636,797 2.29%
--------------------- -------------------- -------------------
Richard Mays 571,429 1,933,356 0.79%
--------------------- -------------------- -------------------
Alasdair Buchanan 1,428,571 3,428,571 1.40%
--------------------- -------------------- -------------------
Mark Routh 1,428,571 1,428,571 0.58%
--------------------- -------------------- -------------------
Related Party Transaction
The participation in the Subscription by the Directors
constitutes a related party transaction under the AIM Rules. Due to
the participation by all of the directors in the Subscription,
there is not a director, or directors, independent of the
Subscription to provide the necessary AIM Rule 13 related party
transaction opinion. Accordingly, Strand Hanson Limited, the
Company's Nominated Adviser, confirms it is satisfied that the
terms of the Subscription are fair and reasonable insofar as the
Company's shareholders are concerned.
1. Resolution 1 - Allotment of Ordinary Shares
Resolution 1 (to be proposed as an ordinary resolution):
proposes that authority be granted to allot ordinary shares in the
capital of the Company up to a maximum nominal amount of one
hundred and twenty-five thousand pounds (GBP125,000) representing
an authority to allot approximately 70.5 percent of the Company's
issued ordinary share capital as at 4 February 2022 (being the
latest practicable date before publication of this document) during
the period following the passing of this Resolution until the
conclusion of the next Annual General Meeting.
Resolution 1 will be proposed as an ordinary resolution. This
means that for Resolution 1 to be passed, at least 50% of the votes
cast must be in favour of the resolution.
2. Resolution 2 - Disapplication of Statutory Pre-Emption Rights
Resolution 2 (to be proposed as a special resolution): to
dis-apply the pre-emption rights pursuant to the provisions of
section 570 of the Act in respect of the allotment of shares up to
a maximum nominal value of one hundred and twenty-five thousand
pounds (GBP125,000), representing an authority to allot
approximately 70.5 percent of the issued ordinary share capital of
the Company as at 4 February 2022 (the latest practicable date
before publication of this document) and shall expire upon the
expiry of the general authority conferred by Resolution 1.
Resolution 2 will be proposed as a special resolution. This
means that for Resolution 2 to be passed, at least 75 % of the
votes cast must be in favour of the resolution.
The Board is proposing Resolutions 1 and 2 in order to achieve
the Placing and Subscription and Broker Option. The Placing and
Subscription and Broker Option are conditional on the passing of
Resolutions 1 and 2. Accordingly, if Resolution 1 is not passed,
the Placing and Subscription and Broker Option will not
proceed.
3. Proposed use of authorities
In addition to fulfilling the Placing and Subscription, together
with sufficient headroom to cover the Broker Option Shares, the
Company is seeking authority to be able to raise funds, if needed,
through the issue of equity without pre-emption to be able to
execute transactions, if and when needed, without having to call a
further general meeting.
The Board believes that Prospex's current portfolio is a
springboard for further growth opportunities. Organic growth is
already happening and corporate acquisitions will also be
considered. Investment and acquisition size will vary according to
the available production linked financing and the Company intends
to leverage the optimum debt levels, a common practice in the
industry, in order to increase returns to shareholders with minimal
risk.
The Company is looking at onshore asset divestments in Northwest
Europe and elsewhere. The Company is also talking to debt
financiers and others to limit the use of equity and shareholder
dilution, but future deals are likely to comprise an element of
both debt and equity. Therefore, the Company proposes to ask
shareholders for the ability to raise funds to grow the Company
through the issue of shares to finance future deals that are in
line with the Company's stated vision and strategy.
The share authorities being granted by Resolutions 1 and 2 will
provide the Company with sufficient share authorities to cover its
growth opportunities in addition to the Placing and Subscription
and any issue of Broker Option Shares. The authorities will also
allow the Company to issue 25 million warrants at 3p per share and
1.92 million warrants at 2.25p share to honour a historic
commitment to the brokers and placees in the March 2021 fundraise
as announced on 9 March 2021.
4. Irrevocable undertakings
The top twelve registered shareholders including the eight 'TR-1
holders' as appearing on the 'AIM Rule 26' of the Company's website
have given irrevocable undertakings to the Company to vote in
favour of the Resolutions to be proposed at the General Meeting
(and, where relevant, to procure that such action is taken by the
relevant registered holders if that is not one of them) in respect
of their beneficial holdings totaling, in aggregate, 100,362,386
Ordinary Shares, representing approximately 56.61 percent of the
voting rights of the Existing Ordinary Shares.
Together with the Board directors who hold in aggregate
8,568,724 Ordinary Shares, the total votes in favour of the
Resolutions will be approximately 61.41 percent of the voting
rights of the Existing Ordinary Shares.
5. Action to be taken by Shareholders
You will find enclosed with this document a reply-paid form of
proxy for use by Shareholders at the General Meeting. Whether or
not you intend to be present at the General Meeting, you are
requested to complete this form in accordance with the instructions
printed on it as soon as possible. To be valid, completed forms of
proxy must be received by Neville Registrars, by no later than
10.00 a.m. on 18 February 2022.
Completion and return of the Form of Proxy will not preclude you
from attending and voting in person at the General Meeting if you
so wish.
Shareholders are reminded that the Placing and Subscription is
conditional on the passing of Resolutions 1 and 2 to be proposed at
the General Meeting. Should Resolutions 1 and 2 not be passed, the
Placing and Subscription and Broker Option will not proceed and the
monies in respect of the New Ordinary Shares will be returned to
investors.
6. Recommendation
The Directors consider the passing of Resolutions 1 and 2 and
the completion of the Placing and Subscription and Broker Option to
be in the best interests of the Company and its Shareholders as a
whole. Accordingly, the Directors unanimously recommend that all
Shareholders vote in favour of the Resolutions, as they intend to
do, or procure to be done, in respect of their own beneficial
shareholdings, being at the Latest Practicable Date, in aggregate,
8,568,724 Ordinary Shares, representing approximately 4.83 percent
of the Existing Issued Ordinary Share Capital.
* *S * *
Editor Notes
Prospex Energy PLC is an AIM quoted investment company focussed
on high impact onshore and shallow offshore European opportunities
with short timelines to production. The Company's strategy is to
acquire undervalued projects with multiple, tangible value trigger
points that can be realised within 12 months of acquisition and
then applying low-cost re-evaluation techniques to identify and
de-risk prospects. The Company's strategy is to rapidly scale up
gas production in the short term to generate internal revenues that
can then be deployed to develop the asset base and increase
production further.
About Selva:
The Podere Gallina Licence is in the Po Valley region of Italy.
The licence contains the currently shut--in Selva gas-field as well
as exciting exploration opportunities. The Podere Maiar-1 well was
completed in December 2017 and successfully found a commercial gas
accumulation up-dip of the previous wells on the Selva field. The
well is suspended and is awaiting permissions to connect it to the
local gas grid for gas export. The Company currently has as 17%
working interest in the Podere Gallina licence. The Company
announced on 10 August 2021 the conditional acquisition of a
further 20% of the Podere Gallina licence from UOG. Subject to
securing funding Prospex is set to increase its working interest to
37% in Q2 2022.
Subject to the award of the Production Concession by the Italian
authorities, expected in March 2022, first gas is targeted for Q1
2023.
The Podere Gallina Licence holds independently verified 2P gross
reserves of 13.4 Bcf (5.0 Bcf net to Prospex at 37% WI), gross
Contingent 2C Resources of 14.1 Bcf (5.2 Bcf net) and a further
91.5 Bcf of gross Best Estimate Prospective Resources (33.9 Bcf
net).
( Source : CGG Services (UK) Limited Competent Persons Report -
January 2019 https://bit.ly/3nZNfYf ).
About El Romeral and Tarba
The El Romeral gas and power project in Spain, with gas
production wells supplying gas to an 8.1MW power plant near Carmona
in Southern Spain is owned and operated by Tarba. Prospex owns a
49.9% working interest in the El Romeral project via Tarba. Tarba
sells electricity generated from the plant on the spot market in
Spain. Current spot market prices have reached all-time highs in
recent months.
Prospex also owns a 15% working interest in the large scale
Tesorillo gas project in southern Spain, which has the potential to
hold gross un-risked Prospective Resources of 831 Bcf of gas (Best
Estimate), with upside in excess of 2 Tcf.
The Tesorillo permit is temporarily suspended, awaiting Ministry
resolution and reinstatement as production licence. The Tesorillo
permit contains the Almarchal-1 gas discovery well (drilled in
1957) which logged 212m of net gas pay. Multiple drill stem tests
flowed gas to surface.
Operated by Tarba (85% Warrego Energy (ASX:WGO) and 15%
Prospex). Prospex has an option to increase to 49.9% for
EUR1,725,000 ahead of drilling a well.
The updated Corporate Presentation for Q1-2022 is available on
the Company's website at https://bit.ly/3G6JtCm .
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