TIDMINFA
RNS Number : 8568F
Infrastrata PLC
22 May 2017
Dissemination of a Regulatory Announcement that contains inside
information according to REGULATION (EU) No 596/2014 (MAR).
22 May 2017
InfraStrata plc
("InfraStrata" or the "Company")
Review of strategic options and
project update
InfraStrata (AIM: INFA) announces that it is launching a review
of the strategic options open to the Company to maximise value for
shareholders. Accordingly, the Company is undertaking a careful
evaluation of its business plan, operational assets, development
strategy, the market valuation of its gas storage asset and its
capital structure.
The Company has been in discussions with interested parties to
provide the remaining GBP2.2 million funding required to complete
the entire Front End Engineering Design ("FEED") and a
commercialisation work programme for the Islandmagee gas storage
project (the "Project"), as previously announced. The Company has
explored many sources of potential finance in debt and equity,
through its own sources and those of its advisers, seeking terms
that are expedient and reasonable for the Company and its
shareholders. The Company stated in announcements on 27 February
2017, 19 April 2017 and 4 May 2017 that there could be no guarantee
that the Company would be successful in its discussions with
potential investors and that it may need to consider using the
remaining funds available to it to explore other options including
a sale of the Project and/or its assets. Exploration of potential
funding sources and discussions with some potential investors
continue, but as the Company stated on 19 April 2017, following
completion of the Concept Evaluation phase of the FEED, existing
funding would only extend to a point in Q4 2017 to meet minimum
corporate and Project expenditure but without funding any
additional work to further progress the FEED. Therefore, with the
Concept Evaluation phase of the FEED programme substantially
completed and without the necessary funds to complete the next
phase currently, the directors of InfraStrata ("Directors")
consider it necessary to explore other options for the Company and
are therefore launching the strategic review.
The UK gas storage market is in a state of significant change
with the well documented problems at the largest facility, Rough.
The Directors believe these changes may increase the long-term
strategic value of the Project and control of the asset may
therefore be more attractive to market participants with balance
sheet resources to take the development forward into
construction.
On 9 May 2017, the Company received a letter that sought to
requisition a general meeting whereby two shareholders claiming to
hold 5.1% of the voting rights in the Company (the
"requisitioners") proposed resolutions for the appointment of two
directors to the Board of the Company and removal of all the
current Directors. On 11 May 2017, the Company announced that the
requisition was invalid as the named shareholders were not on the
shareholder register. On 19 May 2017, the Company received a new
valid requisition from nominee shareholders representing the same
underlying shareholders as the previous requisition and
accordingly, InfraStrata intends to convene the general meeting
requested in due course. The exercise has been a significant
distraction for the Board and as well as incurring time and costs
for the Company, has provided uncertainty at a critical time in
discussions with potential investors and a deterrent to other
funding options. The Directors are seeking to engage with the
underlying shareholders who requisitioned the general meeting to
understand their plans and strategy for InfraStrata.
The Company has applied the net proceeds of the placing
completed on 3 March 2017 of approximately GBP740,000 to repay
GBP200,000 drawn down on a loan from Baron Oil plc and complete the
Concept Evaluation phase of the FEED at a cost of GBP350,000 as
well as to meet management costs and necessary payments in relation
to the Project (for example, renewing land options). The Company's
current cash position stands at GBP175,000, which will allow for
expenditure on a care and maintenance basis until the beginning of
Q4 2017. However, after allowing for anticipated expenditure
necessary to conduct the strategic review and requisitioned general
meeting and a temporary reduction in management costs which will be
kept under review, on current forecasts the remaining cash balance
provides working capital to early August 2017. The key assumption
contained within this forecast is that given the Company's limited
cash resources, the costs associated with any purchase of the
Company's assets would be funded by the acquirer.
The cash currently available to the Company stated above
excludes EUR1.6m of funds held pursuant to the EU grant ("EU
Grant"), which is subject to restrictions on its use, most notably
the requirement that matched funding is obtained from other sources
for the FEED and associated works and, until such time as it may be
released for its specified purposes, remains the property of the
EU. The Directors are of the view that none of the EU funding
received as a prepayment should be expended until the entire FEED
and related commercialisation programme can be funded in full. The
EU Grant will need to be returned to the EU if the programme does
not complete, unless otherwise agreed by the EU.
As to the results of the Concept Evaluation phase of the FEED
programme, whilst the consultants' report is not yet finalised,
initial findings have identified a phased approach for the
development of the salt caverns to potentially improve the time to
market of an initial tranche of capacity, which may enable the
Project to generate revenues earlier than currently anticipated.
Adopting this phased approach may result in some loss of economies
of scale and an extended timeline for full build-out, but it would
reduce the capital expenditure requirement in the earlier stages of
development. Concept Evaluation also identified potential
opportunities to reduce capital and operational costs however these
will require full evaluation during the FEED itself and there is no
certainty at this time that they will result in overall cost
reductions. As part of the Concept Evaluation programme the
detailed design parameters for the FEED study have also been
developed.
Given the current position of InfraStrata and the quality of its
gas storage asset at Islandmagee, continuing with the original
strategy to complete the FEED and a commercialisation work
programme to take the Project to final investment decision and
construction remains a viable option with the necessary funding.
Nevertheless, the strategic review will be wide-ranging. The
strategic options may include a subscription for the Company's
securities by a third party or a farm down or disposal of the gas
storage asset. The Directors are seeking any non-binding offers,
which may be in the form of a GBP2.2 million investment in
InfraStrata to complete the entire FEED and commercialisation work
programme, a proposed acquisition of InfraStrata's 90% interest in
the Project (via its wholly owned subsidiary InfraStrata UK
Limited), a sale of the Project asset (owned by Islandmagee Storage
Limited) subject to the approval of Project partner, Mutual Energy
Limited, or a corporate transaction involving any or all of
InfraStrata's subsidiaries.
There is a data room available for interested parties, to which
access will be granted following execution of a non-disclosure
agreement for those parties who can demonstrate financial
capability.
For further information, please contact:
InfraStrata plc
Anita Gardiner, Joint Managing
Director
Stewart McGarrity, Joint Managing +44 (0)28 9051
Director 1415
Allenby Capital Limited (Nominated
Adviser & Broker)
Jeremy Porter / Alex Brearley +44 (0)20 3328
/ Liz Kirchner 5656
Financial PR - Camarco +44 (0)20 3757
Billy Clegg / Gordon Poole 4980
The Front End Engineering & Design (FEED) and Insitu
Downhole Testing programme for the Islandmagee gas storage project
is co-financed by the European Union's Connecting Europe
Facility.
Disclaimer releasing the European Union from any liability in
terms of the content of the dissemination materials:
"The sole responsibility of this publication lies with the
author. The European Union is not responsible for any use that may
be made of the information contained therein."
Notes:
Background on InfraStrata plc
InfraStrata is an independent gas storage company focused on the
UK and Ireland.
Further information is available on the Company's
website:www.infrastrata.co.uk.
Background on the Islandmagee Storage Project
The Islandmagee gas storage project company, Islandmagee Storage
Limited ("IMSL"), is owned 90% by a wholly owned subsidiary of
InfraStrata plc and 10% by a wholly owned subsidiary of Mutual
Energy Limited. The project is a proposed salt cavern gas storage
facility located on Islandmagee in County Antrim, Northern Ireland.
Work commenced in 2007 with the acquisition of 3D seismic data to
image the Permian salt in the Larne Lough area. During 2012,
planning permission was granted for the project and a gas storage
licence was issued by the Utility Regulator. In October 2013, the
gas storage project was granted a 'Project of Common Interest'
("PCI") status by the European Commission. In 2015 a well was
drilled to core the salt and confirm the technical feasibility of
the project, supported in part by the Commission. The final stage
before a Final Investment Decision will be the Front-End
Engineering Design and Commercialisation of the project. To date
approximately GBP11m has been invested in the project.
Further information is available on the project company's
website: www.islandmageestorage.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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