TIDMNTOG
RNS Number : 8388C
Nostra Terra Oil & Gas Company PLC
13 February 2020
13 February 2020
Nostra Terra Oil and Gas Company plc
("Nostra Terra" or the "Company")
Posting of Circular and Notice of General Meeting
Nostra Terra (AIM:NTOG), the oil and gas exploration and
production company with a portfolio of assets in Texas, USA,
announces that it will today be posting to Shareholders a circular
(the "Circular"), along with accompanying notice of general meeting
and form of proxy (together, with the Circular, the "Documents"),
in relation to the Requisitions.
The General Meeting will be held at 11:00 a.m. on 3 March 2020
at the offices of Druces LLP, Salisbury House, London Wall, London
EC2M 5PS. The Documents will shortly be available on the Company's
website.
The Letter from the Chairman of the Company has been extracted
and included in this announcement below.
Unless the context requires otherwise, definitions used in this
announcement will have the same meaning as ascribed to them in the
Circular.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
For further information, visit www.ntog.co.uk or contact:
Nostra Terra Oil and Gas Company plc
Matt Lofgran, CEO +1 480 993 8933
Strand Hanson Limited
(Nominated & Financial Adviser & Joint Broker) +44 (0) 20 7409 3494
Rory Murphy / Ritchie Balmer / Jack Botros
Shard Capital Stockbrokers (Joint Broker) +44 (0) 207 186 9952
Damon Heath / Erik Woolgar
Lionsgate Communications (Public Relations) +44 (0) 203 697 1209
Jonathan Charles
LETTER FROM THE CHAIRMAN
Dear Shareholder,
NOTICE OF GENERAL MEETING
As Chairman of Nostra Terra, I invite you to a General Meeting
of the Company to be held at 11:00 a.m. on 3 March 2020 at the
offices of Druces LLP, Salisbury House, London Wall, London EC2M
5PS.
Background
On 17 January 2020, the Company announced that it had received a
letter from Eridge Capital Limited ("Eridge") (formerly New World
Oil and Gas plc), dated 15 January 2020, requisitioning a general
meeting of the Company's shareholders (the "First
Requisition").
The First Requisition proposed that, inter alia, Shareholders be
asked to consider resolutions to remove Matt Lofgran from the Board
of Directors of Nostra Terra (the "Board"); to appoint Andrew
Morrison to the Board; and to remove any Directors that may be
appointed in the period between the date of the First Requisition
and the proposed general meeting.
On 24 January 2020, having reviewed the First Requisition with
its advisers, the Company announced that the First Requisition had
been deemed as valid.
On 3 February 2020, the Company announced that, on 31 January
2020, it had received a further letter from Eridge validly
requisitioning a second general meeting of the Company's
shareholders (the "Second Requisition" and, together with the First
Requisition, the "Requisitions"). The Second Requisition proposed
that Shareholders be asked to consider resolutions to remove myself
(Ewen Ainsworth) from the Board; and to remove any Directors that
may be appointed in the period between the date of the Second
Requisition and the proposed general meeting.
On 5 February 2020, the Company announced that the Board
believed that it was in the best interests of the Company and its
Shareholders as whole to consider the Requisitions at a single
general meeting rather than to incur the additional costs and
expenses associated with publishing two separate Shareholder
circulars. In addition, the Second Requisition was received along
with a statement from Eridge to Shareholders concerning the
Requisitions (the "Eridge Statement") for inclusion in the
circular. The Eridge Statement, which has not been verified, is set
out as an appendix to the Circular. The Directors do not accept
responsibility for anything contained within the Eridge
Statement.
Accordingly, the purpose of this circular is to convene a
General Meeting of the Company at which the Resolutions will be put
to a vote of the Shareholders. For each of the Resolutions to be
passed, more than half of the votes cast must be cast in favour of
such Resolution. In this letter, I set out the reasons why the
Board considers that the Resolutions are not in the best interests
of Shareholders and explain why Shareholders should vote AGAINST
the Resolutions.
The Board has provided Eridge multiple opportunities to present
its business case for changes (or not) to the Company's business
model, but no concrete plan has been forthcoming. The Board does
not believe that Eridge has a credible business proposition with
regard to the future of Nostra Terra; the Directors have certainly
not seen any evidence of one to date.
Furthermore, if Eridge succeeds and the Resolutions are passed
by Shareholders, the Company will be left with two Directors and no
Chairman. The Chairman is elected by the Board and, in this event,
the two Directors may not agree on which such Director should be
appointed Chairman and, therefore, the Board could be deadlocked.
If this scenario arises, it is likely, in the opinion of the Board,
that additional shareholder meetings will be necessary, at further
expense to the Shareholders, and further distracting the then
reduced Board from overseeing the Company's operations.
Additionally, there is the possibility that Mr Stafford may end
up as the only Director. Nostra Terra is required to have two or
more Directors under the Companies Act 2006 and pursuant to its
articles of association ("Articles"). In addition, in this event,
it is likely that the Company will be unable to discharge its
management and operating duties sufficiently pursuant to the AIM
Rules to the Companies ("AIM Rules"), which may result in trading
in the Ordinary Shares on AIM being suspended until such time as a
suitable Board has been established. The Board believes that Eridge
has not thought through the implications of its strategy at all,
which, when the history of Eridge itself, formerly an AIM-listed
company under the name New World Oil and Gas plc, which was
de-listed and re-domiciled from Jersey to the British Virgin
Islands is also considered, should, in the Board's view, be of
major concern to Shareholders.
Accordingly, the Board unanimously recommends Shareholders to
vote AGAINST the proposed Resolutions, as they intend so to do in
respect of their own beneficial holdings, which amount, in
aggregate, to 10,309,632 Ordinary Shares, representing
approximately 5 per cent. of the issued share capital of the
Company.
THE RESOLUTIONS
Set out below is a rebuttal of the Resolutions to be considered
at the General Meeting, all of which will be proposed as ordinary
resolutions. This means that for each of the Resolutions to be
passed, more than half of the votes cast must be cast in favour of
such Resolution.
The Board's response to the Requisitions is provided below.
I write in my capacity as Chairman of the Board. The Board has
considered the Requisitions and has the following observations and
recommendations by way of response.
Firstly, I shall address the Requisitions in a general sense and
then respond in more detail to each specific point, highlighting
where necessary information and observations, which may be of use
to Shareholders in forming a considered opinion.
General Opinion
It is the Board's firm belief that the proposals outlined in the
Requisitions are not to the benefit of Shareholders. The
Requisitions are an opportunistic way of trying to gain board
control of a public listed company, whilst not providing any
succession planning, new strategic direction or even a basic
business plan to accompany the proposed changes.
The Board is acutely aware of the disappointing share price
performance over the last twelve months, which has been a difficult
period for the small cap oil and gas sector, but it strongly
believes that the fundamentals of the underlying business are sound
and are improving.
The Company's near-term work plan is designed to grow production
by approximately 50%, whilst minimising costs, over the next twelve
months and as set out in more detail below. The Board recognises
the need to augment the Board through suitable Board appointments
to bring in new thinking and challenge ideas and opinions. Prior to
receipt of the First Requisition, we had talked to several high
calibre candidates about joining the Board but the Requisition
process and the build-up to it has not allowed the Board to execute
this strategy. In short, we have a plan to grow the Company,
increase production, minimise costs and generate shareholder value;
the Board believes the proposals underpinning the Requisitions
would prevent us from delivering this and therefore we strongly
recommend that Shareholders should vote AGAINST the
Resolutions.
I shall now review the specific demands/proposals of
Requisitions, taking each Resolution in turn.
Resolution 1: to remove Matthew Lofgran from the Board
Mr Lofgran has been a Board member and CEO of Nostra Terra for
10 years; it is he who has personally negotiated most of the
transactions completed by the Company over this time. Since the
adoption of the Company's new strategy in 2016, as detailed in each
of the 2016, 2017 and 2018 Annual Report and Accounts (please refer
to the Chairman's Report in each), this has included, inter
alia:
-- Acquisition of the Chisholm Trail asset, which was sold for
US$2.73 million in 2016 and yielded a profit
-- Acquisition of both the Pine Mills and the Permian Basin
(where the Twin Well and G6 well were both successfully drilled)
producing assets, with combined production, during December 2019,
of 127 barrels of oil per day ("bopd") bopd gross, 93 bopd net to
Nostra Terra
o Total revenue in 2018 before the benefit of hedging was US$2.3
million
-- Acquisition and Field Development Plan of the Mesquite Asset, West Texas
-- Negotiation of the Washington Federal Bank ("WAFD") loan
facility (the "Loan Facility"), which has a current outstanding
balance of approximately US$1.74 million
-- Negotiation of hedging contracts with BP
Through discussion with Eridge, it is apparent that they wish
Matt Lofgran to remain an employee, at least initially and,
strangely, in the Board's opinion, that he should continue to lead
the Company as the only full time executive, even if removed from
the Board. However, there is, of course, no guarantee that, if Mr
Lofgran were to be removed from the Board, he would remain with the
Company. Therefore, the removal of Mr Lofgran from the Board could
well mean his exit from the Company.
The Board firmly believes that removal of Mr Lofgran from the
Board and from the Company would not benefit the Company in any
way. He is the only executive of the Company and he has the primary
knowledge of all the Company's current assets and contracts,
including financing, in the US and he has a clear vision and
executable strategy for growth. The relationships Mr Lofgran has
developed with our lenders in the USA, our contractors in the
industry and with our operational staff in the field are far too
valuable to be discarded based on a perceived past twelve-month
difficult spell. It is short sighted to suggest Mr Lofgran's
removal, especially in view of Eridge's proposed replacement, which
is considered under Resolution 3.
In relation to the Loan Facility, the loan documentation
contains a number of customary negative covenants required by WAFD,
one of which relates to the ongoing appointment of Matt Lofgran as
President of the Company's subsidiary, New Horizons Energy 1 LLC
("New Horizons") (the "key man clause"). The key man clause
stipulates that New Horizons must obtain written consent from WAFD
prior to Matt Lofgran ceasing to be President of New Horizons.
Otherwise New Horizons will have 30 days to remedy the situation or
it will be in default of the Loan Facility and the outstanding
principal and interest will immediately become due.
In the event Matt Lofgran is voted off the Board at the
Company's forthcoming General Meeting, there is no guarantee that
Mr Lofgran would remain as an employee of the Nostra Terra group,
and therefore as President of New Horizons. Indeed, if Matt Lofgran
does stay as an employee, he may choose to resign as President of
New Horizons. Accordingly, the Company's Board at such time would
seek the written consent of WAFD to waive the key man clause.
However there is clearly a risk that this would not be given, a
risk the Board believes is increased by this unwelcome General
Meeting. Shareholders should note that the outstanding balance
under the Loan Facility is approximately US$1.74 million.
The Board believes that the confidence that Matt Lofgran has
brought to WAFD, not only in negotiating the Loan Facility
initially, but also in managing it since, through the drawdown and
repayment of funds, and the structured hedging of the oil price for
the Company's production, should not be underestimated by Eridge or
other Shareholders. Matt Lofgran has also worked actively with WAFD
on potential acquisition opportunities and WAFD has been very
supportive, providing letters of support regarding the potential
for a significant increase in the facility size and borrowing
base.
Given this material and important relationship that the Company
has with WAFD, not only with regard to the existing Loan Facility,
but also potential access to further funds if the right growth
opportunity presents itself, the Board believes that the removal of
Matt Lofgran from the Board is counter-productive to shareholders'
interests.
The Board recommends that Shareholders vote against this
Resolution.
Resolution 2: to remove Ewen Ainsworth from the Board
Ewen Ainsworth joined Nostra Terra as Non-Executive Chairman in
2015. Ewen has over 30 years upstream oil and gas finance
experience with a vast array of commercial, legal and most
importantly financial contacts within the City and beyond. In the
opinion of the Board, he has, over this time, along with Matt
Lofgran, been instrumental in structuring the Company's financial
position in terms of the type and composition of the borrowing
undertaken. Furthermore, he has provided advice and expertise on a
consultancy basis to assess commercial risk, corporate structures
and lending vehicles suitable to the Company and of benefit to its
shareholders. He chairs the Board's Audit and Remuneration
Committees and is in the process of restructuring the finance
function within the business.
Ewen has demonstrated his commitment to the Company and his
belief in the Board by accepting a significant part of his
remuneration in shares instead of cash. Crucially, he also has
loaned the Company GBP382,000 (of which GBP268,000 plus unpaid
interest is outstanding) in two tranches over the last four years
to help avoid dilution to Shareholders. Thus, he is personally
invested in seeing the Company grow and its share price performance
improve; removing Ewen would be an extremely high risk strategy as
a replacement may not be so personally motivated and would have to
absorb five years' experience and relationships almost
instantly.
The Board recommends that Shareholders vote against this
Resolution.
Resolution 3: to appoint Andrew Morrison to the Board
The Board has met Mr Morrison and finds him personable. However,
other candidates reviewed by the Board as part of its already
ongoing process prior to the receipt of the First Requisition,
would, the Board believes, be a better fit for the Company. The
most relevant corporate history in relation to Mr Morrison for
Nostra Terra Shareholders to note is the failure of Silvermere
Energy plc ("Silvermere"), which had oil and gas assets in Texas
(where Nostra Terra is an operator and all of its asset are
currently located), which, under Mr Morrison's leadership as
founder and CEO, was suspended from trading on AIM and entered into
a company voluntary arrangement ("CVA") within two years of listing
(at which point Mr Morrison resigned) after which the company
changed its name and strategy. Over this two-year period (where oil
prices were largely in the US$90 per barrel range) Mr Morrison
failed to build a portfolio for Silvermere and ultimately the
company entered into a CVA, failing on a single well.
Further information relating to Mr Morrison is set out below in
compliance with the AIM Rules for Companies:
Andrew John Gowdy Morrison (aged 59)
Current directorships/partnerships Past directorships/partnerships
(last five years)
Spinnaker Opportunities plc None
Spinnaker Management Resources
Ltd
Between 31 August 2011 and 16 August 2013, Mr Morrison was a
director of Silvermere, which entered into a CVA with its creditors
on 16 August 2013, with a deficiency to creditors of GBP1.2
million. The CVA completed on 20 December 2013, pursuant to which
creditors were issued shares in Silvermere, which was then renamed
Tern plc.
The Board recommends that Shareholders vote against this
Resolution as existing higher calibre candidates have already been
identified to strengthen the Board.
Resolution 4: to remove any Directors appointed subsequent to
receipt of the Requisitions and the General Meeting
The Board does not anticipate any appointments in this
period.
The Company has been considering appointing additional Directors
to the Board and, prior to the receipt of the Requisitions, had
held discussions with a number of experienced potential appointees,
with strong track records in the sector, to strengthen the Board
and to assist in implementing its plans for the Company. The
Requisitions and other interference from Eridge, including
inappropriately contacting two candidates directly (which the
candidates relayed to the Board), has made this process more
difficult and delayed any potential appointments. In the event the
Resolutions do not pass, the Board will continue to expedite this
process once again.
The Board recommends that Shareholders vote against this
Resolution.
RESPONSE TO ERIDGE STATEMENT
The Board disagrees with the overall sentiment of the Eridge
Statement, which is set out as an appendix to the Circular, and
wishes to draw Shareholders' attention to the following:
1. Loans by Directors
Two of the Company's Directors, being myself and John Stafford,
provided loans to enable Nostra Terra to crystallise certain
significant opportunities, being the original acquisition of Pine
Mills and the drilling of the G5 well in the Permian Basin, without
diluting shareholders through the issue of further equity.
I advanced GBP230,000 funds for the initial acquisition of Pine
Mills with an initial interest rate of 10% and reduced to 7.5%.
This loan, including any unpaid interest, is immediately repayable
by the Company on demand by myself. At the end of January 2020, the
outstanding balance was GBP230,000 plus unpaid interest.
John Stafford and I advanced a loan of, in aggregate, GBP287,000
to drill the G5 well, with an interest rate of 7.5%. This loan,
including any unpaid interest, is immediately repayable on demand
by either Mr Stafford or myself. At the end of January 2020, the
outstanding balance was GBP71,750 plus unpaid interest.
The loans were announced as related party transactions under the
AIM Rules at the time they were provided and have been disclosed as
related party transactions in the Company's annual report and
accounts.
Your Non-Executive Directors have been financially supportive of
the development of the Company, accepting risk and demonstrating
faith in Matt Lofgran. These loans were provided in order to assist
the Company whilst minimising dilution to shareholders.
Shareholders should note that the loans provided by the
Directors are repayable on demand.
2. Directors Fees and Remuneration
Matt Lofgran's annual remuneration is US$250,000 and his service
agreement contains a six-month notice period. Matt Lofgran's role
as CEO, director and/or employee can be terminated, subject to his
notice period running, at any time. There have been no further
payments or benefits accruing to Mr Lofgran such as a pension,
bonus or healthcare, as would be normal for a CEO of his calibre.
The Board believes that the level of remuneration for Matt Lofgran
as CEO, and the sole executive director of the Company, is
appropriate given the wide range of responsibilities and
demonstrated ability to grow the Company. 2018 reported revenue of
US$2.3 million with field operations achieving a gross profit, and
we are expecting 2019 to be similar. The plan for 2020 is designed
to increase revenues significantly and to cover the overheads of
the business. In 2020, led by Matt Lofgran, it is intended that the
costs of the business will be covered by the increased annual
revenue. This should provide a solid foundation, de-risked over a
portfolio of wells, for continued further growth.
My director fees, which are paid to me directly, and consultancy
fees, which are paid to Discovery Energy Limited ("Discovery"), a
company that I control, are, in aggregate, GBP50,000 per annum of
which GBP30,000 is paid in cash and GBP20,000 in shares. In
addition, a further GBP21,500 annually on average is incurred by
the Company for additional services provided by Discovery.
During 2018, my total fees, including consultancy fees,
were:
Director fee GBP16,667
Consultancy fee GBP33,333
Sub-total GBP50,000
Additional Consultancy GBP38,650
Prior year adjustment GBP2,500
Total GBP91,150 at GBP1 = US$1.33458 = US$121,647
As set out above, the Directors have been financially supportive
of the Company, deferring payment in order to progress the
business. Currently around GBP91,000 of fees are outstanding to me
personally and Discovery relating to 2018 and 2019. Hence, whilst
director and consultancy fees may have been accrued in the
Company's accounts as being due, there is usually a considerable
time lag before payment is made in order to preserve cash in the
business, which relies on the forbearance of the relevant
Directors. The director fee for John Stafford is GBP30,000 per
annum and currently GBP12,500 is outstanding. Given the limited
human resource at the Company's disposal, it is entirely reasonable
that the Company accesses suitable additional skills, at
competitive consultancy rates, when needed.
Amounts owed to Directors should also be viewed in the context
of the substantial funds provided via these Director loans and the
current outstanding balances.
3. Directors interests in the Company
The interests of the Directors are aligned with other
Shareholders in Nostra Terra through either Ordinary Shares that
they hold or various warrants and options. These interests provide
compelling incentive to the Directors in order to grow the business
and drive future value for all Shareholders. The potential value to
be realised from a successful strategy is many times that realised
from the remuneration the Directors may receive as a result of that
success.
The warrants and options granted to the Directors have been
designed, being priced out of the money at the time of grant, to
reward significantly other Shareholders with value accretion before
they can be exercised by Directors.
4. Communications with Eridge
Nostra Terra has, during 2019 and early 2020, sought to engage
positively with Ben Turney, a director of Eridge, via email,
telephone calls and meetings. In this process, the Board has
listened to his concerns and proposals, spending a significant
amount of time doing so.
Mr Turney's communications with the Company have focused on an
overhaul of the Board, including the appointment of a new Executive
Chairman, as well as verbally demanding rights for Eridge to
appoint two further directors to the Board, with Mr Lofgran
accepting a reduced role on the Board, moving from CEO to COO,
while remaining on the Board.
Whilst the Board strongly felt that the proposals contained in
these communications to it were not in the best interest of
Shareholders, it still endeavoured to communicate positively and
constructively with Mr Turney, including commencing due diligence
and background checks on Mr Morrison.
Within a week of the demands outlined above, a second plan was
put forward by Mr Turney, involving the appointment of Mr Morrison
as Executive Chairman, but not requiring the removal of the other
Directors. However, shortly after this, Mr Turney changed his mind
again, this time demanding Mr Lofgran step down from the Board
completely, which was followed in due course by the same demand
regarding me.
The ideas put forward by Mr Turney were always closely
scrutinised by the Board and the Board sought to enter into
dialogue with Mr Turney. It is the Company's belief that should
Eridge have entered into a constructive and open dialogue, Eridge's
stated concerns could have been addressed and a way forward for the
Company agreed. The Board's attempts to engage constructively with
Eridge have been rejected and we believe that Eridge's intent all
along has been effectively to take control of the Company by taking
control of the Board. In the Board's view, Mr Turney has never
seriously positively engaged with us in order to find a compromise.
A compromise, in the Board's belief, would be an outcome in the
best interests of ALL Shareholders.
In addition, Eridge has never presented a plan for the future
direction of the Company. Given this, the Board expects it would be
a period of tremendous uncertainty for Nostra Terra should Mr
Lofgran and/or myself be removed from the Board. In the Board's
view, Eridge and Mr Turney are seeking to place their own interests
before those of all other Shareholders.
5. Corporate Governance
Eridge has stated that there was a failure to report a critical
banking covenant, being the key man clause relating to Matt
Lofgran. This is not accurate, being normal terms of business with
lending agreements, where banks often require such a clause, and to
suggest otherwise is in the view of the Board highly misleading.
The key man clause has only become relevant in the context of
Resolution 1 to be proposed at the General Meeting regarding the
removal of Matt Lofgran.
It is certainly true that Nostra Terra is a small company with
low overheads and a small management team and, therefore, by
definition, the risk associated with the loss of a senior employee
is much different to that within larger organisations. Matt
Lofgran, as CEO, leads the entrepreneurial and operational activity
of the Company which is overseen and scrutinised by the
Non-Executive Directors.
Given Eridge's focus on corporate governance, the Board finds it
ironic that, when Mr Turney became a director of, and took control
at, New World Oil and Gas plc ("New World"), in relation to the
company's migration to the British Virgin Islands ("BVI"), "a
number of shareholders...raised concerns about the proposed move to
the BVI". In an attempt to assuage the concerns of New World
shareholders, New World said: "New World is required to have an
annual audit and to present the accounts to shareholders each year"
and "New World is required to host its Annual General Meetings in
the United Kingdom." The Board notes that Eridge's website, as at
12 February 2020, shows that in the last two years since New World
migrated to the BVI, it has neither published any accounts nor held
any annual general meetings in the UK. The Board believes that this
failure to adhere to standards of corporate governance should
concern all our Shareholders.
6. 2020 Workplan
The Board now wishes to provide Shareholders with some insight
into the workplan it wants the Company to execute in 2020 (the
"2020 Workplan") with a target for year end to grow production by
approximately 50% from current levels. We share this to demonstrate
that a firm growth strategy is in place and to show that adoption
of the Eridge proposals would, in the Board's view, significantly
damage our ability to deliver the shareholder growth envisaged.
The 2020 Workplan is designed to be the 'low cost, high impact
production growth plan'. This focuses on minimising capital
expenditure, whilst growing production and revenues. There are
several key steps identified in delivering this:
Pine Mills
-- Identified 3 well workover candidates which each could add
6-10 bopd production for a total cost of approximately US$75k
-- Repair casing at an existing shut-in well adding
approximately 10 bopd for a capital expenditure of approximately
US$100k
-- Expand electricity infrastructure to allow more pumps and
tank batteries to be placed into production (largely complete)
-- Increase water handling capacity to boost reliability and
field run-time for a cost of approximately US$100k
-- Potential farm-in for a portion of Pine Mills, wherein a well
would be drilled and Nostra Terra would a carried working
interest
Permian Basin
-- Plug uneconomic well to eliminate expense of water handling
for a cost of approximately US$20k
-- Potential purchase of target lease nearby at a cost to be determined
-- Perform completion on existing well and recompletion of other
wells at the potential acquisition site, which has the potential
for 20+ bopd for a cost of approximately US$150k
As can be seen from the above, the 2020 Workplan does not
envisage significant capital expenditure. Whilst the Company has
been looking to finance the capital expenditure and working capital
of the Company via operational cashflow, the Board recognises that
in order to accelerate the plan to increase production by 50%,
further funds will need to be raised. To this end the Company is in
advanced discussions with a funding provider to raise finance,
although there is no guarantee that this can be finalised
satisfactorily.
There are also transactions and opportunities about which the
Board is talking to interested parties and hopes to execute in due
course.
In summary, the Board believes that Shareholders will be best
served by rejecting the Eridge proposals, voting AGAINST the
Requisitions and allowing the current Board to continue to
strengthen, grow and execute its growth strategy for this year and
beyond.
Action to be taken
You will find enclosed with this document a Form of Proxy for
use in connection with the General Meeting. Whether or not you
intend to be present at the General Meeting, you are requested to
complete the Form of Proxy in accordance with the instructions
printed on it so as to be received by Share Registrars Limited as
soon as possible, but in any event no later than 11.00 a.m. on 28
February 2020. Alternatively, if you hold shares in CREST, you can
appoint a proxy electronically by using the CREST electronic proxy
appointment service.
EVERY SHAREHOLDER'S VOTE IS IMPORTANT - PLEASE COMPELTE AND
RETURN YOUR FORM OF PROXY AS SOON AS POSSIBLE.
Completion of the Form of Proxy will not preclude you from
attending and voting at the General Meeting should you so wish.
Recommendation
For the reasons set out in this letter, your Board believes that
Resolutions 1-4 (inclusive) will not promote the success of, and
are not in the best interests of, the Company and its Shareholders
as a whole.
Your Board therefore unanimously recommends that you vote
AGAINST Resolutions 1-4 (inclusive), as the Directors intend so to
do in respect of their own beneficial holding of, in aggregate,
10,309,632 Ordinary Shares, representing approximately 5 per cent.
of the issued share capital of the Company.
Shareholders should note that in the event that Resolutions 1
and 2 are passed but Resolution 3 is voted down, the Company will
have only one Director, which is in breach of the Companies Act
2006 and the Company's Articles. In addition, in this event, it is
likely that the Company will be unable to discharge its management
and operating duties sufficiently pursuant to the AIM Rules, which
may result in trading in the Ordinary Shares on AIM being suspended
until such time as a suitable Board has been established.
Yours faithfully
Ewen Ainsworth
Chairman
ENDS
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END
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