TIDMCIP
RNS Number : 5841C
CIP Merchant Capital Ltd
22 January 2018
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ANNOUNCEMENT.
22 January 2018
CIP MERCHANT CAPITAL LIMITED
("CIP Merchant Capital" or the "Company")
First Investment
CIP Merchant Capital, the AIM quoted closed-ended investment
company, is pleased to announce its first investment in line with
its investing policy following its admission to trading on AIM in
December 2017.
The Company has agreed to subscribe for, in aggregate, GBP6.0
million worth of shares in Saffron Energy Plc ("Saffron"), the AIM
quoted European gas company with interests in Northern Italy
pursuant to a GBP14.0 million equity placing with institutional and
other investors by Saffron (the "Saffron Placing"). Saffron has
today also announced that it has agreed to acquire the Italian oil
and gas assets of both Sound Energy Plc ("Sound Energy") and Po
Valley Energy Limited ("Po Valley") together with a strategy of
seeking to acquire other assets to enhance its portfolio.
Information on Saffron
Saffron is currently interested in three gas fields in Northern
Italy, being the Sillaro and Bezzaco gas fields, which are both
currently producing, and the Sant'Alberto gas field which is
currently being developed.
Following discussions with both Sound Energy and Po Valley,
Saffron announced on 5 October 2017 that it had entered into
non-binding conditional heads of terms with both parties, to
acquire their respective Italian oil and gas interests and permits,
with the aim of significantly increasing Saffron's portfolio of
Italian assets and positioning itself as a mid-cap regional gas
producer and explorer.
Further to Saffron's announcement of 5 October 2017, Saffron
announced earlier today that it had entered into binding
conditional sale and purchase agreements with each of Sound Energy
and Po Valley under which it is proposed that Saffron acquires both
Sound Energy's and Po Valley Energy's portfolio of Italian
interests and permits. These acquisitions will be structured by way
of an acquisition of Sound Energy Holdings Italy Limited ("SEHIL")
(the "Proposed SEHIL Transaction") and Po Valley Operations Pty Ltd
("PVO") (the "Proposed PVO Transaction"), for both of which the
principal business is the exploration for and production of liquid
and gaseous hydrocarbons across Italy.
Under the Proposed SEHIL Transaction, Saffron will acquire SEHIL
in consideration for the issue to Sound Energy of 185,907,500 new
ordinary shares of GBP0.001 each in the capital of Saffron
("Saffron Shares") (the "SEHIL Consideration Shares"), subject to,
inter alia, the shareholders of Saffron approving the issue of the
new Saffron Shares. The SEHIL Consideration Shares are intended to
be issued by Saffron directly to Sound Energy's shareholders.
Pursuant to the terms of the Proposed PVO Transaction, Saffron
will acquire PVO in consideration for the issue to Po Valley of
200,000,000 Saffron Shares, subject to, inter alia, the
shareholders of Saffron approving the issue of the new Saffron
Shares. On completion of the proposed acquisitions of SEHIL and PVO
and the Saffron Placing, Po Valley will be interested in
approximately 32.75% of Saffron's then enlarged share capital.
The proposed acquisition by Saffron of SEHIL's and PVO's natural
gas and oil assets contemplated in the transactions adds
significant larger assets to the Saffron portfolio, including the
Selva onshore gas field, which recently reported strong gas flows
resulting from successful flow testing of the Podere Maiar 1dir
exploration well which confirmed a net pay of 41 metres from two
identified gas reservoirs and a peak flow rate of over 148,000
scm/day, the Teodorico offshore Adriatic gas field (47 bcf)
development and the large Torre del Moro and Santa Maria Gorretti
and Dalla gas exploration licences, plus two smaller gas production
fields.
On completion of the proposed acquisitions of SEHIL and PVO,
Saffron will continue to develop its Italian assets. In addition,
the Company will look to acquire assets which enhance its portfolio
and where there are operating and other synergies. Saffron believes
that these assets will be located both in Europe and elsewhere, and
that in particular there will be opportunities to acquire
exploration licenses in South East Asia.
Saffron therefore intends to pursue a combined European and
South East Asian regional exploration strategy focused on multi Tcf
(trillion cubic feet), low cost, onshore gas piped to high value,
growing markets.
By virtue of their size, each of the Proposed SEHIL Transaction
and Proposed PVO Transaction constitutes a reverse takeover under
Rule 14 of the AIM Rules for Companies, and will require Saffron
shareholder approval. Documents (including an AIM admission
document) to convene a general meeting of Saffron shareholders at
which resolutions will be tabled, inter alia, to grant its
directors the authorities to issue the relevant consideration and
placing shares, are currently under preparation, and it is expected
that such general meeting will be held in March 2018. The Saffron
Shares will remain suspended from trading on AIM, pending
publication of an AIM admission document. Subject to shareholder
approval, Saffron will also be re-named Coro Energy Plc.
In the six months ended 30 June 2017, Saffron reported revenues
of EUR0.56 million and a loss of EUR0.92 million and as at 30 June
2017 had total assets of EUR12.5 million and net assets of EUR5.2
million.
Information of the Saffron Placing
Saffron has raised, in aggregate, gross proceeds of GBP14.0
million, with GBP561,138 to be subscribed for immediately by CIP
(the "Initial Subscription") and with GBP13,438,862 to be
subscribed for subject to, inter alia, Saffron shareholder approval
of the proposals, which is expected to be received in March 2018
and the completion of the proposed acquisitions of SEHIL and PVO
(the "Second Subscription"), through the issue of, in aggregate,
319,634,703 new Saffron Shares at a price of 4.38 pence (the
"Placing Price"). The aggregate proceeds of the Saffron Placing
will be deployed primarily to evaluate, drill and develop any
acquired assets.
Pursuant to the terms of the Saffron Placing, the Company has
agreed to subscribe for, in aggregate, GBP6.0 million, with
GBP561,138 million to be subscribed for under the Initial
Subscription and GBP5,438,862 under the Second Subscription.
In addition, each investor in the Saffron Placing will be
granted warrants for one year to subscribe for additional Saffron
Shares at a price for 6.57 pence, being 150% of the Placing Price,
on the basis of one warrant for every two Saffron Shares
subscribed. Pursuant to the terms of the Saffron Placing and in
return for acting as a cornerstone investor to the placing, the
Company will also receive, in aggregate, a further 13,698,629 new
Saffron Shares in satisfaction of commissions due to it.
On admission of the new Saffron Shares to be issued to the
Company pursuant to the Initial Subscription and the associated
commissions, the Company will be interested in approximately 7.05%
of Saffron's then enlarged share capital.
On completion of the Second Subscription, the Proposed SEHIL
Transaction and the Proposed PVO Transaction, the Company will be
interested in approximately 16.45% of Saffron's then enlarged share
capital and will be interested in 68,493,150 warrants.
Saffron also intends, following its re-admission to AIM, to
offer its existing shareholders the opportunity to participate in
the funding via an open offer to raise approximately GBP2.0 million
at the Placing Price.
Disclosure re certain Directors' interests in Saffron and Sound
Energy
Marco Fumagalli and Carlo Sgarbi are both directors of the
Company and Merchant Capital Manager Limited, the Company's
investment manager. In addition, Mr Fumagalli and Mr Sgarbi, are
both beneficiaries of Continental Investment Partners SA ("CIP"),
an affiliate of the Company's investment manager. CIP, through
certain associates is interested in, in aggregate, approximately
6.6% of Sound Energy.
Mr Fumagalli is also a non-executive director of Sound Energy
and Saffron and it is proposed that Mr Fumagalli will, along with
the other directors of Saffron, be issued options over 10 million
Saffron Shares at the Placing Price.
For further information, please contact:
Merchant Capital Manager Limited (Investment
Manager)
Marco Fumagalli +41 91 225
Carlo Sgarbi 25 60
Strand Hanson Limited (Financial & Nominated
Adviser and Broker) +44 20 7409
Richard Tulloch / James Bellman 3494
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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