TIDMRPO
RNS Number : 0420X
RusPetro plc
14 November 2014
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN
PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH
JURISDICTION
THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND DOES NOT CONSTITUTE A
PROSPECTUS. NOTHING IN THIS ANNOUNCEMENT SHALL CONSTITUTE OR FORM
PART OF, AND SHOULD NOT BE CONSTRUED AS, AN OFFER TO SELL OR ISSUE
OR THE SOLICITATION OF AN OFFER TO BUY OR SUBSCRIBE FOR ANY
SECURITIES REFERRED TO HEREIN NOR SHOULD IT FORM THE BASIS OF, OR
BE RELIED ON IN CONNECTION WITH, ANY CONTRACT OR COMMITMENT
WHATSOEVER.
RUSPETRO PLC
Proposed Debt Restructuring and Refinancing
The Directors of Ruspetro plc ("Ruspetro" or the "Company"), a
London listed independent oil and gas development and production
company with assets in the Western Siberia region of Russia, are
pleased to announce the terms of Ruspetro's proposed Restructuring.
The principal components of the Restructuring comprise:
-- The refinancing of approximately US$337.2 million of existing
debt and the cancellation of the existing Put Option over the
Company's shares for GBP12.6 million (approximately US$20.2
million). This will be satisfied in part through:
- the issue of such number of New Ordinary Shares to Mastin
Holdings Limited, a company beneficially owned by Sergey Gordeev,
the President and a major shareholder of PIK Group, as represents
25.0 per cent. of the Company's Enlarged Share Capital; and
- a US$150.0 million five year term New Facility to be provided
by "Bank Otkritie Financial Corporation" (Open Joint Stock
Company), a leading Russian private financial institution.
-- A new Development Facility to be provided by Otkritie for up
to US$100.0 million in two equal tranches.
-- A new Credit Facility to be provided by Otkritie for up to US$44.7 million.
-- The extension of existing Shareholder Loans representing
approximately US$96.6 million in aggregate.
-- A fully underwritten Open Offer at 10 pence per Share,
raising approximately GBP18.3 million (US$29.3 million) and a
Placing at 10 pence per Share, raising up to GBP15.0 million
(US$24.0 million). The minimum guaranteed proceeds of the Open
Offer and the Placing will be GBP25.1 million (approximately
US$40.2 million) before expenses.
The implementation of the Restructuring is conditional upon,
inter alia, the approval of the Shareholders at a general meeting
of the Company, which is expected to be held at 10.00 a.m. on 5
December 2014 at the offices of White & Case LLP, 5 Old Broad
Street, London EC2N 1DW. A combined prospectus and circular
convening the general meeting is expected to be posted to
Shareholders shortly, in which further information regarding the
Restructuring can be found.
The Restructuring has the support of a wide range of
stakeholders, including a substantial proportion of the Independent
Shareholders, and the Company has received sufficient irrevocable
undertakings to pass all of the Resolutions to be put before
Shareholders at the General Meeting.
Highlights of the Restructuring
The Restructuring will enable the Group to progress the
development of its large West Siberia hydrocarbon reserves and
resources through the continuation of its multi-stage fractured
horizontal well drilling programme.
Following the completion of the Restructuring, it is expected
that:
-- approximately US$337.2 million of existing debt owed by
Ruspetro LLC, a wholly owned subsidiary of the Company, will be
refinanced, due in April 2018 under the Existing Facility;
-- the Group will owe US$150.0 million of senior debt to
Otkritie pursuant to the terms of a US$150.0 million New Facility
entered into between INGA (one of the Company's wholly-owned
subsidiaries) and Otkritie and due for repayment in November
2019;
-- Mastin will own 25.0 per cent. of the Enlarged Share Capital of the Company;
-- the total liabilities of the Group will be reduced by approximately US$173.1 million;
-- the Group will have access to a new Development Facility of
up to US$100.0 million entered into between INGA, the principal
operating subsidiary of the Company incorporated as an open joint
stock company in Russia, and Otkritie. This will be available in
two tranches of US$50.0 million, the first of which will be drawn
down on completion of the Restructuring and the second of which is
expected to be available from July 2015, depending on the Group's
ability to meet a production covenant in the first half of
2015;
-- the Group will have access to a Credit Facility of up to
US$44.7 million entered into between INGA and Otkritie and due for
repayment in November 2019, to be used for general working capital
purposes;
-- the Makayla Shareholder Loan entered into between Ruspetro
Holding Limited, a wholly owned subsidiary of the Company, and
Makayla, a shareholder of Ruspetro, on 5 August 2010, will have
been extended to October 2016;
-- the Limolines Shareholder Loan entered into between Ruspetro
Holding Limited and Limolines, also a shareholder of Ruspetro, on
23 April 2008, will have been extended to February 2020;
-- in addition to the Development Facility and the Credit
Facility, the Group will have received, prior to the costs of the
Restructuring, estimated to be US$7.5 million, at least GBP25.1
million (approximately US$40.2 million) in new cash proceeds from
(i) a fully underwritten Open Offer to certain qualifying
Shareholders to apply for, in aggregate, 183,359,814 Open Offer
Shares and (ii) a Placing of up to 150,188,572 Placing Shares in
the Company to be subscribed by Limolines, Makayla and Nervent, the
Company's largest current shareholders. In the event that all
Shareholders participate in the Open Offer, the Group could receive
up to GBP33.4 million (approximately US$53.4 million) (before
expenses) under the Placing and Open Offer;
-- the Group will have no outstanding Put Option obligations;
-- the Company's obligations to repay the Further Limolines Loan
(in respect of the principal amount and interest totalling US$10.7
million) in February 2015 will be off-set against Limolines'
obligations to subscribe for New Ordinary Shares in the Placing and
Open Offer; and
-- US$5.0 million in respect of accrued interest under the
Makayla Shareholder Loan will be repaid in May 2015.
These summary highlights should be read in conjunction with the
further details of the Restructuring, which are set out below.
John Conlin, Chief Executive Officer of Ruspetro plc,
commented:
"This landmark transaction gives Ruspetro the necessary capital
to execute the next phase of its horizontal drilling programme and
to continue the application of innovative technology to unlock
value from our assets. We look forward to strong and productive
relationships with our new lender and shareholder and welcome them
as partners in the business."
Further information:
The Prospectus will be published shortly and will be available
on the Company's website, www.ruspetro.com.
For further information please visit www.ruspetro.com.
Enquiries:
Dominic Manley
Ruspetro plc
+44 7540 460 872
Twitter: @Ruspetroplc
Background to, and reasons for, the Restructuring
In considering the requirements for developing the Group's
significant hydrocarbon assets, the board of the Company (the
"Board") has determined that the Group needs to undertake a
financial and capital restructuring. The overriding reason for this
is that the Group currently has a very high level of indebtedness,
and needs to reduce and restructure its existing debt finance
obligations.
Such indebtedness includes the following:
-- principal and accrued interest under the facility agreement
entered into between Ruspetro Holding Limited ("RHL") and Makayla
Investments Limited ("Makayla") on 5 August 2010 in the amount of
US$15.0 million (as amended from time to time) (the "Makayla
Shareholder Loan") due in May 2015, which as at September 2014
amounted to approximately US$22.7 million;
-- principal and accrued interest under the facility agreement
entered into between RHL and Limolines Transport Limited
("Limolines") on 23 April 2008 in the amount of US$50.0 million (as
amended from time to time) (the "Limolines Shareholder Loan") due
in May 2018. In the event of default thereunder, RHL would be
obliged to immediately repay the outstanding principal sum and
accrued interest, which as at 30 September 2014 amounted to, in
aggregate, approximately US$73.9 million;
-- US$10.7 million in principal and interest under a US$10.0
million unsecured short term loan between Limolines and the
Company, dated 22 August 2014 (the "Further Limolines Loan") due in
February 2015;
-- approximately US$25 million in annual interest payments under
the facility agreement entered into between Ruspetro LLC and
Sberbank in the amount of US$250 million on 30 April 2008 (which
facility was assigned by Sberbank to Sberbank Capital in November
2014) (the "Existing Facility"), with the first payment of
approximately US$10.7 million due in April 2015;
-- a put option obligation to purchase 10,362,632 shares at
121.94 pence per Share from Sberbank Capital between 30 April 2015
and 29 April 2016 inclusive, at the election of Sberbank Capital;
and
-- in the event of a default under the Existing Facility,
Ruspetro LLC would be obliged to immediately repay to Sberbank
Capital the outstanding principal sum and accrued interest of
US$337.2 million.
Securing access to additional capital and a longer term
restructuring of the Group's balance sheet remains imperative for
the Company despite extensions to the repayment of the Company's
existing debt obligations agreed in 2013 and 2014.
The Group has recently embarked on a new strategy to develop its
large West Siberia hydrocarbon reserves and resources through a
multi-stage fractured horizontal well drilling programme, two wells
of which have now been completed.
The Board considers that the Group needs to raise additional
capital both in order to ensure the Group's going concern status
and for it to be able to continue its well drilling programme.
During the course of 2014, the Group has been working with
Sberbank, Russia's largest and majority State owned bank and Sergey
Gordeev, an investment professional based in Moscow with
significant expertise in M&A transactions and broad experience
in managing various assets, with the support of "Bank Otkritie
Financial Corporation" (Open Joint Stock Company) ("Otkritie"), a
leading Russian private financial institution, to develop proposals
which will achieve these objectives.
Sergey Gordeev, through Mastin Holdings Limited ("Mastin"), a
company beneficially owned by him, entered into arrangements with
Otkritie, such that both Otkritie and Mastin will participate in
the Restructuring. Mr. Gordeev is President and a major shareholder
of PIK Group, one of the leading residential real estate developers
in Russia, listed on the London Stock Exchange and is also a
minority shareholder of Otkritie Holding (the principal shareholder
of Otkritie), owning 6.4 per cent. of its shares.
The Board is of the view that the proposed Restructuring will
enable it to achieve its strategic objectives and to create
significant shareholder value over the medium to longer term.
However, should the Restructuring not proceed, based on the
current cash position of the Group and its current level of
production, the Directors believe that the Group will face an
immediate risk of being unable to meet its contractual obligations
as they fall due. In such circumstances, the Directors are of the
opinion that the Company is highly likely to cease trading, and
that the subsidiaries of the Company would become subject to
applicable insolvency processes and/or Sberbank Capital would be
able to enforce its security over the shares of INGA and Trans-oil
and thereby acquire the operating business of the Group, with
Shareholders as a consequence losing the value of their investment
in the Company. The Company is not in advanced alternative funding
discussions and there can be no guarantee that any other funding
will be available to the Group in the event the Restructuring does
not proceed.
The Restructuring
Following the successful conclusion of negotiations, the
principal components of the Restructuring are as follows:
-- the purchase by Mastin of:
- the Group's existing indebtedness under the Existing Facility
(in the amount of approximately US$337.2 million, including the
principal amount and accrued interest) from Sberbank Capital (the
rights having been transferred from Sberbank to Sberbank Capital
prior to the date of this announcement),
- 10,362,632 ordinary shares in the Company (the "Put Option
Shares") currently held by Sberbank Capital, and
- Sberbank Capital's existing put option over the Put Option Shares,
(in each case subject to approval of the Restructuring);
-- the replacement of the Existing Facility (following its
purchase by Mastin) with a new five year US$150.0 million facility
to be provided by Otkritie and due for repayment in November 2019
(the "New Facility"), together with the conversion into equity of
the balance of approximately US$187.2 million of the Existing
Facility (the "Conversion Amount") and the cancellation of the
Company's obligations under the Put Option through the issue to
Mastin of New Ordinary Shares in the Company at an implied
conversion price of between approximately 72 pence per Share
(assuming no take up by Shareholders, other than the Related Party
Shareholders, of the Open Offer) and approximately 62 pence per
Ordinary Share (assuming full take up of the Open Offer);
-- the provision of a new development facility to be provided by
Otkritie for up to US$100.0 million in two equal tranches (the
"Development Facility"). The first tranche of US$50.0 million will
be drawn down immediately following completion of the
Restructuring. The final US$50.0 million (the "Development Facility
Second Tranche") is expected to be available for draw down in July
2015, subject to the Group meeting the Development Facility
Covenant;
-- the provision of a US$44.7 million credit facility to be
provided by Otkritie (the "Credit Facility") for general working
capital purposes;
-- the extension of the Makayla Shareholder Loan to October 2016
and the extension of the Limolines Shareholder Loan to February
2020;
-- a fully underwritten Open Offer to all Shareholders of the
Company pursuant to which the Company intends to raise GBP18.3
million (approximately US$29.3 million) through the issue of
183,359,814 New Ordinary Shares (the "Open Offer Shares") at 10
pence per Open Offer Share. The Open Offer is fully underwritten by
Limolines, Makayla and Nervent (the "Underwriting Shareholders");
and
-- a placing of up to 150,188,572 New Ordinary Shares (the
"Placing Shares") to the Underwriting Shareholders pursuant to
which the Company will raise, depending on Shareholders take up
under the Open Offer, between GBP6.8 million (approximately US$10.9
million) and GBP15.0 million (approximately US$24.0 million) of new
equity at 10 pence per Placing Share:
- The size of the Placing will be such that (i) the Underwriting
Shareholders (and their associates) (the "Related Party
Shareholders") will together retain at least a 50.01 per cent.
interest in the Company's Enlarged Share Capital and (ii) the total
aggregate subscription in the Placing and Open Offer by the Related
Party Shareholders will not be less than GBP25.1 million
(approximately US$40.2 million); and
- No Shareholders other than the Underwriting Shareholders will
be entitled to participate in the Placing.
The Restructuring will provide the Group with significant
additional financial resources and, subject to drawdown of the
Development Facility Second Tranche, enable it to move forward with
the implementation of the Upside Development Plan.
The Guaranteed Net Proceeds of the Restructuring, comprising the
initial tranche of the Development Facility of US$50.0 million and
gross proceeds of GBP25.1 million (approximately US$40.2 million)
from the Placing and Open Offer (assuming that there is no
participation by Shareholders other than the Related Party
Shareholders in the Open Offer) less costs of the Restructuring of
approximately US$7.5 million, will be approximately US$82.7
million. Assuming full take up of the Open Offer by all
Shareholders, the gross proceeds of the Placing and Open Offer will
be GBP33.4 million (approximately US$53.4 million) and accordingly,
the net proceeds of the Restructuring will be approximately US$95.9
million. In addition, the Company will be able to draw down up to
US$44.7 million under the Credit Facility.
The drawdown of the Development Facility Second Tranche of
US$50.0 million (expected to be available from July 2015) is
dependent on the Group achieving the Development Facility Covenant.
Should the Development Facility Covenant not be met or the
Development Facility Second Tranche is not drawn down, then the
Company will only receive the Guaranteed Net Proceeds of the
Restructuring, and it will continue to implement the Development
Plan.
Following the completion of the Restructuring, Mastin shall,
irrespective of the take up of New Ordinary Shares by other
Shareholders pursuant to the Placing and Open Offer, hold Ordinary
Shares representing 25.0 per cent. of the Company's Enlarged Share
Capital.
The Board considers that a continuing majority ownership
position for the Related Party Shareholders, being the majority of
the Group's founding shareholders, the participation of Mr. Gordeev
as a significant shareholder through Mastin and Otkritie as the
Group's major lender, will represent major advantages for the Group
and all of its Shareholders.
Further details on the terms and conditions of the Placing and
Open Offer
The Company intends to raise up to GBP18.3 million
(approximately US$29.3 million) through the issue of 183,359,814
New Ordinary Shares by way of an Open Offer at 10 pence per Share.
The Open Offer Price of 10 pence per Open Offer Share, which is
payable in full on acceptance by not later than 11.00 a.m. on 3
December 2014, represents a 18.4 per cent. discount to the closing
price of 12.25 pence per Share on 13 November 2014 (being the
latest practicable date prior to the date of this announcement) and
a 21.5 per cent. discount to the average closing price of 12.74
pence per Ordinary Share for the three month period prior to the
announcement of the Restructuring.
Qualifying Shareholders are being given the opportunity to
subscribe for New Ordinary Shares pro rata to their existing
shareholdings at the Open Offer Price on the basis of:
0.55 Open Offer Shares for every 1.00 Existing Ordinary
Share
held by Qualifying Shareholders and registered in their name at
the Record Date. Qualifying Shareholders may apply for any whole
number of New Ordinary Shares.
Shareholders holding fewer than two Existing Ordinary Shares
will have no entitlement to subscribe under the Open Offer.
Fractions of New Ordinary Shares will not be allotted and each
Qualifying Shareholder's entitlement under the Open Offer will be
rounded down to the nearest whole number. The fractional
entitlements will be aggregated and subscribed for by the Related
Party Shareholders and the net proceeds of such subscription will
be retained for the benefit of the Company.
The Related Party Shareholders have agreed to subscribe for
their Open Offer Entitlements under the Open Offer and the
Underwriting Shareholders have agreed to underwrite any Open Offer
Shares that are not taken up in the Open Offer by other Qualifying
Shareholders. As the Open Offer is fully underwritten, the Open
Offer will result in 183,359,814 New Ordinary Shares being issued
(representing approximately 55.0 per cent. of the existing issued
ordinary share capital and up to 20.9 per cent. of the Enlarged
Share Capital assuming all Shareholders subscribe for their Open
Offer Entitlement).
Excess Application Facility
In addition and subject to availability, the Excess Application
Facility will enable Qualifying Shareholders to apply for any whole
number of Excess Shares in excess of their Open Offer Entitlements
up to a maximum number of Excess Shares not exceeding 78,000,000
Open Offer Shares.
The Placing
The Company also intends to raise up to GBP15.0 million
(approximately US$24.0 million) through the issue of up to
150,188,572 Placing Shares at 10 pence per Placing Share. The
Placing Price is the same as the Open Offer Price. The Underwriting
Shareholders have agreed to participate in the Placing and to
subscribe for such number of Placing Shares in the Agreed
Proportion as will result in the Related Party Shareholders
continuing to hold not less than 50.01 per cent. of the Enlarged
Share Capital and investing, including their participation in the
Open Offer, not less than GBP25.1 million (approximately US$40.2
million) pursuant to the Placing and Open Offer.
The number of Placing Shares to be subscribed will depend upon
the level of take up by Qualifying Shareholders (other than the
Related Party Shareholders) in the Open Offer. On the basis of
irrevocable undertakings to subscribe in the Open Offer received by
the Company, it is expected that the Placing will result in a
minimum of 67,890,186 New Ordinary Shares, and a maximum of
150,188,572 New Ordinary Shares being issued (representing
approximately 20.4 to 45.1 per cent. of the existing issued
ordinary share capital and 8.9 to 17.2 per cent. of the Enlarged
Share Capital respectively).
Following the Restructuring, the Related Party Shareholders will
continue to hold not less than 50.01 per cent. of the Enlarged
Share Capital.
General
The New Ordinary Shares in respect of the Placing and Open
Offer, when issued and fully paid, will rank pari passu in all
respects with the Existing Ordinary Shares, including the right to
receive all dividends or other distributions made, paid or declared
after the date of their issue.
Application will be made for the New Ordinary Shares to be
admitted to the premium listing segment of the Official List and to
trading on the London Stock Exchange's main market for listed
securities. It is expected that Admission will become effective on
10 December 2014 and that dealings for normal settlement in the New
Ordinary Shares will commence at 8.00 a.m. on the same day.
Further information on the Placing and Open Offer and the terms
and conditions on which it is made, including the procedure for
application and payment, will be set out in the Prospectus and,
where relevant, in the Application Form.
The Placing and Open Offer is conditional, inter alia, upon:
(a) the passing of the Resolutions;
(b) Admission becoming effective by not later than 8.00 a.m. on
10 December 2014 (or such later time and/or date as the Sponsor,
the Company, Otkritie, Mastin and certain other parties may agree,
not being later than 8.00 a.m. on 19 December 2014); and
(c) the Equity Implementation Agreement, the Refinancing
Agreement and the Sponsor's Agreement becoming unconditional in all
respects (the principal terms of such documents will be summarised
in Part 17 (Additional Items) of the Prospectus).
Principal terms of the New Debt Facilities
New Facility
On 14 November 2014, Otkritie and INGA (as borrower) entered
into the New Facility for the purpose of refinancing part of
Ruspetro LLC's obligations under the Existing Facility. Pursuant to
the New Facility, Otkritie has agreed to lend INGA US$150.0
million, conditional upon the Resolutions being passed (without
material amendment) and the other conditions to the Restructuring
being satisfied or waived (where applicable).
The New Facility is repayable in November 2019 and interest on
amounts borrowed under the New Facility is 8.0 per cent. per annum,
payable quarterly, in addition to 0.5 per cent. of the principal
being repayable quarterly.
The New Facility will be drawn down as one of the steps to
effect the Restructuring. The proceeds of the New Facility will be
used for repayment of the amount of the Existing Facility that
remains outstanding after the payment of the Conversion Amount.
Following such repayment, the Existing Facility will have been
satisfied in full.
The New Facility (together with the Credit Facility and
Development Facility) will rank senior to any other indebtedness of
the Group, in particular the Shareholder Loans. The New Facility
contains certain financial covenants and acceleration rights,
including consolidated EBITDA targets and production targets, which
are described below.
The New Debt Facilities contain certain cross-default
provisions. The New Facility is secured by pledges over 100 per
cent. of the shares in INGA and Trans-oil, and guarantees by the
Company, RHL, Trans-oil and Ruspetro LLC. The New Facility is
governed by Russian law.
Credit Facility
On 14 November 2014, Otkritie and INGA (as borrower) entered
into the US$44.7 million Credit Facility for general working
capital purposes.
Pursuant to the Credit Facility, Otkritie has agreed to lend
INGA up to US$44.7 million (conditional upon the Resolutions being
passed (without material amendment) and the other conditions to the
Restructuring being satisfied or waived (where applicable)),
repayable in November 2019. Interest on amounts borrowed under the
Credit Facility is 8.0 per cent. per annum, payable quarterly, in
addition to 0.5 per cent. of the principal being repayable
quarterly.
The Credit Facility contains certain financial covenants and
acceleration rights, including consolidated EBITDA targets and
production targets, which are described below.
The Credit Facility (together with the New Facility and
Development Facility) will rank senior to any other indebtedness of
the Group, in particular the Shareholder Loans. The New Debt
Facilities contain certain cross-default provisions. The Credit
Facility is secured by second lien pledge/mortgage on certain
property, plant and equipment of INGA and Trans-oil, and guarantees
by the Company, RHL and Trans-oil. The Credit Facility is governed
by Russian law.
Development Facility
On 14 November 2014, Otkritie and INGA (as borrower) entered
into a new US$100.0 million Development Facility for the purpose of
financing the Development Plan and/or the Upside Development
Plan.
Pursuant to the Development Facility, Otkritie has agreed to
lend INGA up to US$100.0 million (conditional upon the Resolutions
being passed (without material amendment) and the other conditions
to the Restructuring being satisfied or waived (where applicable)),
repayable in November 2019. Interest on amounts borrowed under the
Development Facility is 10.25 per cent. per annum, payable
quarterly, in addition to 0.5 per cent. of the principal being
repayable quarterly.
Otkritie has agreed to make available a first tranche borrowing
of US$50.0 million upon Completion of the Restructuring. The
draw-down of the Development Facility Second Tranche (expected to
be available from July 2015) is dependent on the Group achieving
the Development Facility Covenant (and provision of certain other
customary deliverables and confirmations to Otkritie which are
within the control of the Company).
The Development Facility contains certain financial covenants
and acceleration rights, including consolidated EBITDA targets and
production targets, as described below.
The Development Facility (together with the New Facility and
Credit Facility) will rank senior to any other indebtedness of the
Group, in particular the Shareholder Loans. The New Debt Facilities
contain certain cross-default provisions. The Development Facility
is secured by pledge on certain property, plant and equipment of
INGA and Trans-oil, and guarantees by the Company, RHL and
Trans-oil. The Development Facility is governed by Russian law.
New Debt Facilities Covenants
Each of the New Facility, Credit Facility and Development
Facility contain certain covenants, including consolidated EBITDA
and production targets. Actual results will be compared with such
targets at the beginning of 2016, and thereafter every three months
until the New Facility is fully repaid ("Comparison Dates").
Specifically, on each Comparison Date the total production target
will be compared with actual total production for the last 12
months and the EBITDA target will be compared with actual EBITDA
for the 12 months preceding the most recent quarter. Otkritie may
accelerate payments of outstanding amounts under the New Facility
in the event that any of the actual total production or EBITDA at a
certain Comparison Date is less than the respective target by more
than 45 per cent., (a "Major Breach"), or if the actual total
production or EBITDA on two consecutive Comparison Dates is less
than the respective targets by more than 25 per cent. (a "Minor
Breach"), or in the event that INGA fails to make a scheduled
payment of interest or principal, or breaches of certain other of
its undertakings under the New Facility and if none of certain cure
measures are implemented.
Pursuant to a Minor Breach, Otkritie will have the right to
nominate a candidate for the role of Chief Executive Officer of the
Company and/or general managers of Ruspetro's subsidiary
undertakings. If there are two consecutive Minor Breaches Otkritie
may accelerate payments of outstanding amounts under the New
Facility whether or not the Group accepts Otkritie's proposed
candidate for Chief Executive Officer and/or general managers of
Ruspetro's subsidiary undertakings.
Otkritie will not have the right to accelerate payments under
the New Debt Facilities or nominate candidates for management roles
of the Group in case of Major Breach or Minor Breach if the Group
maintains the ratio of net senior debt to annualised EBITDA below
2.5:1. Annualised EBITDA will be calculated at each Comparison Date
by multiplying actual EBITDA for the six months preceding the most
recent quarter by two.
If the Group's actual free cash flow during a quarter, adjusted
for any interest and/or principal payments for the New Facility,
the Credit Facility and/or Development Facility in that quarter, is
above US$1.0 million as calculated on two consecutive quarters, the
Group will pay 50 per cent. of free cash flow for these quarters to
Otkritie, with such amount to be credited to the outstanding
balance of the New Facility, the Credit Facility or Development
Facility, as determined by INGA. The remaining balance of the New
Facility will be repaid in full at the New Facility's due date.
Related party transactions
Each of the Related Party Shareholders is a related party of the
Company for the purposes of the Listing Rules, being either
entities owned and controlled by directors of the Company or which
have held more than 10 per cent. of the issued share capital of the
Company in the 12 months since the date of the Prospectus.
Accordingly, the participation of the Underwriting Shareholders in
the Placing requires the approval of Independent Shareholders at
the General Meeting.
The Company proposes that the participation by each Underwriting
Shareholder in the Placing is subject to a separate resolution at
the General Meeting. As such, each resolution to approve the
Related Party Transactions must be approved by a simple majority of
Shareholders excluding the relevant Related Party Shareholder and
its associates. Accordingly:
-- the participation by Limolines in the Placing, including the
right for Limolines to off-set its obligation to subscribe for
certain New Ordinary Shares in the Placing and Open Offer against
the Company's obligations to repay the Further Limolines Loan in
the amount of US$10.7 million, and the agreement to amend the
Limolines Shareholder Loan to pay 25 per cent. of the Group's free
cash flow in repayment of the Limolines Shareholder Loan after (i)
any payment of the Group's free cash flow is made to Otkritie under
the New Debt Facilities and (ii) only after the Makayla Shareholder
Loan is repaid in full, will require the approval of Shareholders
(other than Limolines and its associates, who shall not be entitled
to vote on such resolution) at the General Meeting in accordance
with the Listing Rules;
-- the participation by Makayla in the Placing, together with
the repayment in May 2015 of US$5.0 million in accrued interest and
the agreement to amend the Makayla Shareholder Loan to pay 25 per
cent. of the Group's free cash flow in repayment of the Makayla
Shareholder Loan after any payment of the Group's free cash flow is
made to Otkritie under the New Debt Facilities, will require the
approval of Shareholders (other than Makayla and Sega Wealth and
their associates, who shall not be entitled to vote on such
resolution) at the General Meeting in accordance with the Listing
Rules; and
-- the participation by Nervent in the Placing will require the
approval of Shareholders (other than Nervent, BTL and Roony and
their associates, who shall not be entitled to vote on such
resolution) at the General Meeting in accordance with the Listing
Rules.
Effect of the Restructuring
Prior to the Restructuring, the Group currently:
-- owes approximately US$337.2 million of senior debt to
Sberbank Capital, secured by a pledge of shares of INGA and
Trans-oil, the operating companies that own the Group's appraisal
and production licences, falling due in April 2018;
-- will have US$106.7 million due under the Limolines
Shareholder Loan due in May 2018 and US$24.2 million due under the
Makayla Shareholder Loan due in May 2015;
-- trade creditors balance of approximately US$11.4 million as at 12 November 2014;
-- pursuant to the Put Option has an obligation to purchase
10,362,632 Ordinary Shares at 121.94 pence per share, which may be
exercised between 30 April 2015 and 29 April 2016 inclusive;
-- has, other than the Put Option, approximately US$60 million
of outstanding obligations due in 2015, including US$11 million due
in the first quarter of 2015 and US$35 million due in the second
quarter of 2015;
-- has cash at hand of approximately US$4.2 million as at 12 November 2014; and
-- has 333,381,480 Ordinary Shares outstanding.
Following the Restructuring, the capital and financial position
of the Group will be as follows:
-- the total liabilities of the Group will be reduced by approximately US$173.1 million;
-- Ruspetro LLC will owe US$150.0 million of senior debt to
Otkritie pursuant to the terms of the New Facility, due for
repayment in November 2019;
-- subject to certain conditions, the Group will have access to
a Credit Facility of up to US$44.7 million and a Development
Facility of up to US$100.0 million, both due for repayment in
November 2019;
-- the Group will be able to fund all interest and capital
payments due on the New Debt Facilities up to and including June
2016;
-- the Makayla Shareholder Loan and Limolines Shareholder Loan
will both have been extended, to October 2016 in the case of the
Makayla Shareholder Loan, and February 2020 for the Limolines
Shareholder Loan;
-- the Group will have received, prior to the costs of the
Restructuring of US$7.5 million, at least GBP25.1 million
(approximately US$40.2 million) in new cash proceeds from the
Placing and Open Offer, and, subject to all Shareholders
participating in the Open Offer, up to GBP33.4 million (US$53.4
million);
-- the Group will have no outstanding obligations pursuant to
the Put Option over its share capital;
-- the Group will have no outstanding obligations pursuant to
the Further Limolines Loan which will be repaid in full on
Completion and its obligation pursuant to the Makayla Shareholder
Loan will be reduced on the payment of US$5.0 million in respect of
accrued interest in May 2015; and
-- depending on the level of take up by Qualifying Shareholders
in the Open Offer, the Enlarged Share Capital will consist of
between 765,691,797 and 875,422,978 Ordinary Shares.
The following table sets out, for illustrative purposes only,
the shareholdings of the different Shareholder groups before and
after the Restructuring and their investment in the
Restructuring:
Equity investment
Current into the
Shareholder group shareholding Restructuring Post Restructuring shareholding
---------------------------- -------------- ------------------ -------------------------------------------
Assuming only
Assuming full the Related
participation Party Shareholders
by all Shareholders participate
in the Open in the Open
Offer(1) Offer
approximately
Related Party Shareholders 55.12% US$40.2 million 50.02% 56.81%
Up to US$13.2
Other Shareholders 44.88%(2) million 24.98% 18.19%
Mastin and Otkritie None N/A(3) 25.00% 25.00%
(1) Assuming take up in full by all Shareholders, other than
Sberbank Capital which has provided an irrevocable undertaking not
to take up its Open Offer Entitlements, of their own Open Offer
Entitlements and all of the Excess Shares.
(2) Includes Sberbank Capital's 3.1 per cent. holding
transferred to Mastin as part of the Restructuring.
(3) Otkritie will be providing debt finance to the Group and
Mastin will be providing an indirect investment by the payment to
Sberbank Capital for the purchase of part of the Shares and the
assignment of other rights and then accepting the issue of relevant
Shares in settlement of liabilities from the Group, as referred to
in further detail elsewhere in this announcement.
Free float
The UKLA requires issuers listed on the Official List, such as
Ruspetro, to maintain not less than 25 per cent. of their listed
shares "in public hands" (that is, a free float of at least 25 per
cent.), or such lower threshold as the UKLA may determine in its
discretion. Upon Completion of the Restructuring and depending on
the level of take up by existing minority shareholders in the Open
Offer, the Company will not have sufficient free float in the
Ordinary Shares. Assuming full take up of the Open Offer by all
Qualifying Shareholders, the Company's free float will be 19.7 per
cent. and, assuming only the Related Party Shareholders, the
Directors and Schroder Investment Management Ltd, who have
irrevocably undertaken to participate in the Open Offer, take up
their full Open Offer Entitlements, the Company's free float will
be a 13.9 per cent. If this occurs, the UKLA may require the
Company to delist from the Official List. A delisting of the
Ordinary Shares would adversely affect the ability of new
Shareholders and prospective investors to buy Ordinary Shares and
of existing Shareholders to sell them. Any delisting would
significantly adversely affect the price of the Ordinary
Shares.
The Company, the Related Party Shareholders and Mastin have,
pursuant to the Equity Implementation Agreement and the Refinancing
Agreement (as applicable), agreed to cooperate to ensure that
sufficient Shares are available to be placed or sold to purchasers
who would be included within the free float calculations in
accordance with the Listing Rules. Specifically within six months
of Completion:
-- Mastin has agreed to sell Shares equal to up to 9.8 per cent.
of the Enlarged Share Capital in which it will be interested
following Completion of the Restructuring;
-- the Related Party Shareholders have agreed to dispose of
Shares, to the extent necessary in conjunction with Mastin and
provided that their aggregate interests remain not less than 50.01
per cent. of the issued share capital; and
-- the Company has agreed to use its general authority to issue
new shares for cash equal to 5 per cent. of the Enlarged Share
Capital, to the extent necessary in conjunction with Mastin and the
Related Party Shareholders to ensure that 25 per cent. of the
Enlarged Share Capital is "in public hands".
The Company has not actively marketed its Shares in recent
months as it has been focussing on operational and financial
uncertainties. However, the proposed Restructuring would give the
Company significantly greater certainty over its financial position
and its ability to execute the Development Plan and/or Upside
Development Plan. Accordingly, immediately following the
publication of this announcement the Company working with its
broker, Mirabaud, will commence an investor relations programme to
re-establish relationships with investors, analysts and other
relevant opinion formers with a view to creating demand for the
Shares and promoting a liquid market in the Ordinary Shares.
However, the Directors cannot be certain that there will be
sufficient demand for the Shares from investors who would qualify
as being in public hands under the Listing Rules and there is a
risk that the Company will not restore its free float within a time
frame acceptable to the UKLA. If the free float in the Ordinary
Shares remains insufficient to meet the UKLA's requirements at the
end of the six month period after Completion of the Restructuring,
the Directors will consider proposing a resolution to its
Shareholders to cancel the Company's listing on the premium segment
of the Official List and its trading on the main market of the
London Stock Exchange and move its listing to another market in
London. This could significantly adversely affect the price of the
Shares.
Use of proceeds of the Restructuring
The Restructuring will provide the Group with significant
additional financial resources in the form of new equity capital
from the Placing and Open Offer, and additional debt funding from
the Development Facility and the Credit Facility and enable it to
move forward with the implementation of its Development Plan and/or
Upside Development Plan.
The Directors expect to use the Guaranteed Net Proceeds of the
Restructuring, to implement the Development Plan. The Company will
also use the proceeds from the Restructuring to pay Makayla US$5.0
million in respect of accrued interest under the Makayla
Shareholder Loan in May 2015, repay the Further Limolines Loan, pay
sums due to trade creditors and to provide general working capital.
The Conversion and the New Facility (once drawn down) will not
result in any new cash being made available to the Group.
The US$100.0 million Development Facility may be drawn down by
the Group in two tranches, whilst the US$44.7 million Credit
Facility may be drawn down to meet general working capital purposes
without condition. Under the Development Facility, the first
tranche of US$50.0 million will be immediately available for draw
down following Completion. The draw down of the Development
Facility Second Tranche (expected to be available from July 2015)
is dependent on the Group achieving the Development Facility
Covenant. Should the Development Facility Covenant not be achieved,
then the Company will only receive the Guaranteed Net Proceeds of
the Restructuring.
Following Completion and up until the end of 2015, the Company
will implement its Development Plan, which continues the horizontal
multi-stage fracture well drilling programme commenced during 2014
by completing the third and final horizontal multi-stage fractured
well off Pad 23b. Simultaneously, the Group intends to drill and
complete three short radius horizontal appraisal wells by the end
of May 2015 from Pad 20 and Pad 17. Following completion of the two
appraisal wells on Pad 20, the Company will seek to drill three
horizontal development wells off Pad 20, with the first such well
expected to be spudded in May 2015.
In the event that the Development Facility Covenant is met and
the Group draws down the Development Facility Second Tranche, the
Company will proceed to implement the Upside Development Plan from
July 2015. Under its Upside Development Plan, the Group would seek
to accelerate the development of its assets based on the results of
the Development Plan, which would include continuing the initial
appraisal programme commenced in the first half of 2015 and
including the drilling of additional horizontal multi-stage
fractured wells on Pad 20, focused on increasing average production
and therefore revenues significantly by December 2015.
In the event that the Development Facility Covenant is not met
or if the Group does not draw down the Development Facility Second
Tranche, the Company will only receive the Guaranteed Net Proceeds
of the Restructuring and will continue to implement its Development
Plan.
Under the Development Plan, future production and therefore
revenues will be significantly lower than would be the case if the
Upside Development Plan were to be implemented successfully and,
whilst the Company is of the opinion that, taking into account the
Guaranteed Net Proceeds of the Restructuring, the Group would have
sufficient working capital for its present requirements, that is,
for at least the 12 months following the date of the Prospectus,
the Group would not anticipate being able to meet the New Debt
Facilities Covenants in the longer term. Accordingly, the Group
could incur a Minor or Major Breach of the New Debt Facilities
Covenants as early as January 2016.
Relationship Agreements
Additionally, in view of the recent changes to the Listing Rules
relating to controlling shareholders of listed companies, Limolines
has agreed to amend the existing relationship agreement with the
Company which regulates, in part, the degree of control that
Limolines and its associates may exercise over the management of
the Company, so as to ensure that the terms of such relationship
agreement are consistent with the requirements of Chapter 9 of the
Listing Rules (as regards arrangements with a controlling
shareholder). Additionally, each of Makayla and Nervent have
entered into a separate relationship agreement to regulate (in
part) the degree of control that Makayla and its associates and
Nervent and its associates, respectively, may exercise over the
management of the Company, with the terms of such relationship
agreements consistent with the requirements of Chapter 9 of the
Listing Rules (as regards arrangements with a controlling
shareholder). This is because Makayla and Nervent (and their
respective associates) are acting in concert with Limolines for the
purposes of the City Code and therefore they are collectively
deemed to be a "controlling shareholder" for the purposes of the
Listing Rules.
Mastin and the Company have also entered into a separate
relationship agreement to regulate (in part) the degree of control
that Mastin and its associates may exercise over the management of
the Company. The Company has agreed that Mastin shall have the
right to nominate one director to the Board for so long as its
associates own 10 per cent. or more of the Company's Shares.
City Code on Takeovers and Mergers
The City Code on Takeovers and Mergers (the "City Code") is
issued and administered by the Panel on Takeovers and Mergers (the
"Panel"). The Panel has been designated as the supervisory
authority to carry out certain regulatory functions in relation to
takeovers pursuant to the Directive on Takeover Bids (2004/25/EC)
(the "Directive"). Following the implementation of the Directive by
the Takeovers Directive (Interim Implementation) Regulations 2006,
the rules set out in the City Code which are derived from the
Directive now have a statutory basis.
The Company is a public company incorporated in England and the
Ordinary Shares are listed on the premium segment of the Official
List and traded on the London Stock Exchange's main market for
listed securities. Accordingly, the City Code applies to the
Company.
Under Rule 9 of the City Code, where any person acquires,
whether by a series of transactions over a period of time or not,
an interest in shares which (taken together with shares in which
persons acting in concert with him are interested) carry 30 per
cent. or more of the voting rights of a company which is subject to
the City Code, that person is normally required by the Panel to
make a general offer to all the remaining shareholders of that
company to acquire their shares. Similarly, when any person,
together with persons acting in concert with him, is interested in
shares which in aggregate carry not less than 30 per cent. of the
voting rights of a company but does not hold shares carrying more
than 50 per cent. of such voting rights and such person, or any
person acting in concert with him, acquires an interest in any
other shares which increases the percentage of shares carrying
voting rights in which he is interested, a general offer will
normally be required in accordance with Rule 9.
An offer under Rule 9 must be made in cash and at the highest
price paid by the person required to make the offer, or any person
acting in concert with him, for any interest in shares of the
company during the 12 months prior to the announcement of the
offer. Under the City Code a concert party arises when persons
acting together pursuant to an agreement or understanding (whether
formal or informal) actively co-operate to obtain or consolidate
control of, or frustrate the successful outcome of an offer for, a
company subject to the City Code. Control means an interest or
interests in shares carrying an aggregate of 30 per cent. or more
of the voting rights of the company, irrespective of whether the
holding or holdings give de facto control.
Limolines, the AR Entities and the Nervent Entities are
considered to be acting in concert (the "Concert Party") for the
purposes of the City Code and each of the AR Entities and the
Nervent Entities are considered to be sub-concert parties (the
"Sub-concert Parties"). The current shareholdings and the expected
shareholdings upon Admission of the Concert Party and the
Sub-concert Parties are set out below:
Shareholder Current shareholding Upon Admission
----------------------------- -------------------------
Percentage
Number of issued Percentage of Enlarged
of Shares share capital Share Capital
------------ --------------- -------------------------
Minimum(1) Maximum(2)
------------ -----------
Limolines.............................. 90,150,000 27.04 24.99 28.38
AR Entities
Makayla.................................. 28,819,017 8.64 8.02 9.11
Sega Wealth............................. 4,226,120 1.27 0.75 0.86
------------ --------------- ------------ -----------
Sub-total AR Entities........... 33,045,137 9.91 8.78 9.97
Nervent Entities
Nervent................................... 46,479,833 13.94 13.75 15.61
BTL........................................ 11,430,000 3.43 2.04 2.31
Roony..................................... 2,643,082 0.79 0.47 0.54
------------ --------------- ------------ -----------
Sub-total Nervent
Entities.. 60,552,915 18.16 16.25 18.46
Total....................................... 183,748,052 55.12 50.02 56.81
============ =============== ============ ===========
1) Assuming take up in full by all Shareholders, other than
Sberbank Capital which has provided an irrevocable undertaking not
to take up its Open Offer Entitlements, of their own Open Offer
Entitlements and all of the Excess Shares.
2) Assuming take up in full by only the Related Party
Shareholders of their Open Offer Entitlements.
Upon Admission, members of the Concert Party will be interested
in Shares representing, in aggregate, more than 50 per cent. of the
issued share capital of the Company. Accordingly, following
Admission and for so long as they continue to be recognised as
acting in concert, members of the Concert Party may increase their
aggregate interests in the Company without incurring an obligation
under Rule 9 to make a general offer. However, the Sub-concert
Parties or any individual member of the Concert Party may incur an
obligation to make a general offer as a result of an acquisition of
an interest in shares which increases its or his interests to 30
per cent. or more of the issued share capital or, if it or he is
already interested in 30 per cent. or more, which increases the
percentage of shares in which it or he is interested.
Upon Admission, Mastin will be interested in 25 per cent. of the
Enlarged Share Capital. Mastin, Otkritie and Mr Gordeev are
considered to be acting in concert with each other for the purposes
of the City Code (but not with the existing Concert Party).
Shareholder Approval, Irrevocable Undertakings and Open Offer
commitments
In order for the Restructuring to proceed, the Shareholders must
approve the Resolutions and by the time of admission of the New
Ordinary Shares to the premium segment of the Official List and
trading on the London Stock Exchange's main market for listed
securities, all conditions precedent in relation to the
Restructuring, including the issue of the New Ordinary Shares, must
have been satisfied.
The Company has received irrevocable undertakings from Robert
Jenkins and Maurice Dijols (both Directors of the Company who hold
Shares), Henderson Global Investors Ltd, Schroder Investment
Management Ltd, Kalior Invest S.A. and Sberbank Capital that they
will vote in favour of each of the Resolutions, such irrevocable
undertakings in respect of 68,988,092 Shares representing 20.7 per
cent. of the issued share capital of the Company as at the date of
this announcement. In addition the Company has received irrevocable
undertakings from:
-- Limolines, in respect of 90,150,000 Shares representing
approximately 27.0 per cent. of the Company's issued share capital,
to vote in favour of each Resolution, except for the Resolution
which relates to Limolines participation in the Restructuring;
-- the Makayla Entities, in respect of 33,045,137 Shares
representing approximately 9.9 per cent. of the Company's issued
share capital, to vote in favour of each Resolution, except for the
Resolution which relates to the Makayla Entities participation in
the Restructuring; and
-- the Nervent Entities, in respect of 60,552,915 Shares
representing approximately 18.2per cent. of the Company's issued
share capital, to vote in favour of each Resolution, except for the
Resolution which relates to the Nervent Entities participation in
the Restructuring.
Accordingly, the Company is in receipt of sufficient irrevocable
undertakings to vote at the General Meeting as will ensure that all
of the Resolutions will be approved.
The Related Party Shareholders have undertaken to take up in
full their Open Offer Entitlements. Schroder Investment Management
Ltd. has undertaken to take up Open Offer Entitlements as will
result in it holding not less than 4.99 per cent. of the Enlarged
Share Capital. In addition, Sberbank Capital has undertaken not to
take up any of its Open Offer Entitlements.
Importance of the vote and consequences if the Restructuring
does not proceed
If Shareholders do not approve the Resolutions at the General
Meeting, the Restructuring will not complete and the Company will
not receive any proceeds from the Placing and Open Offer or have
the Credit Facility, the Development Facility and the New Facility
at its disposal. Accordingly, if Shareholders do not approve the
Resolutions the Board is of the opinion that the Group would not
have sufficient working capital for its present requirements that
is for at least the 12 months following the date of the
Prospectus.
If the Restructuring does not complete, the Group would have a
working capital shortfall of approximately US$7.2 million, based on
approximately US$11.4 million of trade creditors and cash at hand
of approximately US$4.2 million as at 12 November 2014, being the
last practicable date prior to the publication of this
announcement.
Additionally, if the Restructuring does not complete, the Group
is required to (i) repay the Further Limolines Loan in the amount
of US$10.7 million in February 2015, (ii) pay interest in the
amount of approximately US$10.7 million to Sberbank Capital under
the Existing Facility in April 2015 and (iii) repay all outstanding
principal and accrued interest under the Makayla Shareholder Loan
in the amount of approximately US$24.2 million on 15 May 2015.
Additionally, Sberbank Capital is entitled to exercise the Put
Option in respect of 10,362,632 Ordinary Shares at any time from 30
April 2015 until 29 April 2016, which would require the Company to
purchase these Ordinary Shares for an amount equal to GBP12.6
million (approximately US$20.2 million).
Furthermore, Mirella intends to provide, shortly after
publication of the Prospectus, an advance payment of US$20 million
to the Company on behalf of the obligations of Limolines, Makayla
and Nervent to participate in the Placing and Open Offer for
working capital purposes. If this advance payment is made and the
Restructuring does not proceed, the Company will be required to
repay this amount on terms to be agreed.
Accordingly, if the Resolutions are not passed and the
Restructuring does not proceed, the Group would need to (i) secure
immediate funding of approximately US$7.1 million to finance its
current obligations and (ii) implement certain additional actions
so as to allow it to meet its existing contractual obligations as
and when they fall due, to the extent possible, including:
-- further reducing planned capital expenditure, including
drilling wells, and placing operating assets on care and
maintenance (which would be achievable but would adversely affect
the Group's ability to maintain production);
-- further reducing the Group's cost base (which may be
achievable and could require additional up-front costs, adversely
affecting the Group's operational capabilities);
-- conserving cash through stricter working capital management
(which may deliver limited benefits but which is not expected to be
a long-term solution);
-- seeking to renegotiate or defer existing contractual
obligations in respect of amounts due to creditors including
suppliers, bank loans and shareholder loans (although there is no
certainty that such agreements could be obtained or obtained on
terms acceptable to the Group); and
-- accelerating the strategic review of its assets, including
the potential sale of part or all of its interests in its operating
subsidiaries (INGA and Trans-oil) and/or the PI Block and/or the VI
Block and/or the Palyanovo Block (although there is no certainty
that such sales could be realised in the available timeframe on
acceptable terms, or at all).
The Directors would initiate all of these measures immediately
upon the conclusion of the General Meeting if Shareholders do not
approve the Resolutions in order to avoid insolvency proceedings
being commenced. In the view of the Directors, these measures are
possible but highly unlikely to be available to the Company or
effective in the event that the Resolutions are not approved and
the Restructuring does not proceed. Accordingly, the Directors
believe that if the Restructuring does not proceed, the Group would
face an immediate risk of being unable to meet its contractual
obligations when they fall due, in which circumstances the Company
would cease trading and the subsidiaries of the Company would
become subject to applicable insolvency processes and/or Sberbank
Capital would be able to enforce its security over the shares in
INGA and Trans-oil and thereby acquire the operating businesses of
the Group.
IF THE RESOLUTIONS ARE NOT PASSED AND THE RESTRUCTURING DOES NOT
PROCEED THE GROUP WILL TAKE IMMEDIATE ACTION IN ORDER TO CONTINUE
TRADING, HOWEVER, THERE IS A HIGH PROBABILITY THAT THE COMPANY WILL
NOT ACHIEVE THIS, IN WHICH CASE IT WOULD BE HIGHLY LIKELY THAT THE
COMPANY WOULD CEASE TRADING, MEANING THAT THERE WOULD BE NO VALUE
RETURNED TO SHAREHOLDERS. ACCORDINGLY, IT IS VERY IMPORTANT THAT
SHAREHOLDERS VOTE IN FAVOUR OF THE RESOLUTIONS.
Recommendation
The Board considers the Restructuring and the Resolutions to be
in the best interests of the Company and its Shareholders as a
whole.
Accordingly, the Board unanimously recommends that the
Shareholders vote in favour of the Resolutions, as the Directors
intend to do in respect of their own beneficial holdings and those
of their connected persons (other than the Related Party Directors
and their associates (as defined in the Listing Rules) in the case
of the applicable Related Party Resolutions).
The Independent Directors, who have been so advised by Strand
Hanson, consider the terms of each of the Related Party
Transactions to be fair and reasonable as far as the Shareholders
are concerned. In providing its advice to the Independent
Directors, Strand Hanson has taken into account the Independent
Directors' commercial assessment of the Related Party Transactions.
None of the Related Party Directors have taken part in the Board's
consideration of the Related Party Transactions.
The beneficial holdings of the Directors and those of their
connected persons amount in aggregate to 150,977,915 Ordinary
Shares and represent approximately 45.3 per cent. of the Company's
issued share capital as at 13 November 2014 (being the latest
practicable date prior to the date of this announcement). The
Directors have undertaken to vote such beneficial holdings in
favour of Resolutions 1, 3, 5 and 6.
The beneficial holdings of the Directors (other than Kirill
Androsov, being a Related Party Director) and those of their
connected persons amount in aggregate to 60,827,915 Ordinary Shares
and represent approximately 18.2 per cent. of the Company's issued
share capital as at 13 November 2014 (being the latest practicable
date prior to the date of this announcement). The Directors (other
than Kirill Androsov) have undertaken to vote such beneficial
holdings in favour of Resolution 2 (Approval of the Related Party
Transaction with Limolines).
The beneficial holdings of the Directors (other than Alexander
Chistyakov and Tom Reed, being Related Party Directors) and those
of their connected persons amount in aggregate to 90,425,000
Ordinary Shares and represent approximately 27.1 per cent. of the
Company's issued share capital as at 13 November 2014 (being the
latest practicable date prior to the date of this announcement).
The Directors (other than Alexander Chistyakov and Tom Reed) have
undertaken to vote such beneficial holdings in favour of Resolution
4 (Approval of the Related Party Transaction with Nervent).
In addition, the Company has received irrevocable undertakings
from Henderson Global Investors Ltd, Schroder Investment Management
Ltd, Kalior Invest S.A. and Sberbank Capital that they will vote in
favour of each of the Resolutions, such irrevocable undertakings in
respect of, in aggregate, 68,713,092 Shares representing 20.6 per
cent. of the issued share capital of the Company as at the date of
this announcement, and from the Makayla Entities, in respect of
33,045,137 Shares representing approximately 9.9 per cent. of the
Company's issued share capital, to vote in favour of each
Resolution except for Resolution 2, which relates to the Makayla
Entities participation in the Restructuring.
Accordingly, the Company is in receipt of sufficient irrevocable
undertakings to vote at the General Meeting as will ensure that all
of the Resolutions will be approved.
Prospectus
The Prospectus, containing full details of how Shareholders can
participate in the Open Offer, and the Notice of General Meeting
are expected to be published shortly. Copies of the Prospectus will
be available on the Company's website, www.ruspetro.com. Copies of
the Prospectus will also be available from the registered office of
the Company at Office 178, Berkeley Square House, Berkeley Square,
London W1J 6BD during normal business hours on any weekday (except
Saturdays, Sundays and public holidays) from the date of its
publication until Admission.
Expected timetable and further information
Ruspetro will shortly issue a combined circular and prospectus
to Shareholders, setting out the details of the Restructuring and
convening a general meeting of the Company, which is expected to be
held at 10.00 a.m. on 5 December 2014 at the offices of White &
Case LLP, 5 Old Broad Street, London EC2N 1DW, at which the
Resolutions will be put to Shareholders.
Event 2014
Record Date for entitlements under the Open 5.00 p.m. on 13
Offer November
Announcement of the Restructuring 14 November
Latest time and date for receipt of completed 11.00 a.m. 3 December
Application Forms and payment in full under
the Open Offer or settlement of relevant
CREST instructions (as appropriate)
Latest time and date for receipt of Forms 10.00 a.m. on 3
of Proxy or submission of proxy votes electronically December
Results of the Placing and Open Offer announced 7.00 a.m. on 4 December
through an RIS
General Meeting 10.00 a.m. on 5
December
Admission and commencement of dealings in 8.00 a.m. on 10
the New Ordinary Shares expected to commence December
CREST stock accounts expected to be credited 10 December
for the New Ordinary Shares as soon as practicable
after
Share certificates for New Ordinary Shares 17 December
expected to be despatched by
Notes:
(1) Each of the times and dates in the above timetable is
subject to change, in which event details of the new times and/or
dates will be notified to the FCA and the London Stock Exchange
and, where appropriate, Qualifying Shareholders.
(2) All references to time in this announcement relate to London time.
If all requisite Shareholder approvals are obtained and other
conditions satisfied, the Restructuring is expected to become
effective, and dealings in the New Ordinary Shares are expected to
commence, on 10 December 2014.
Definitions
The following definitions apply in this announcement unless the
context requires otherwise.
"Agreed Proportion" the proportion in which the Underwriting
Shareholders have agreed to subscribe
for any Open Offer Shares not taken up
in the Open Offer and the Placing Shares,
being 48.2195 per cent. as to Limolines,
17.1337 per cent. as to Makayla and 34.6468
per cent. as to Nervent
"Application Form" the application form to be sent to qualifying
Shareholders such that they may apply
for Open Offer Shares under the Open
Offer
"BTL" Bristol Technologies Limited, a company
beneficially owned and controlled by
Alexander Chistyakov
"Company" or "Ruspetro" Ruspetro plc
"Conversion" the repayment of the Conversion Amount
by the issue by the Company of the Conversion
Shares to Mastin
"Conversion Amount" all of the principal and accrued interest
due under the Existing Facility less
US$150.0 million
"Conversion Shares" the New Ordinary Shares to be issued
to Mastin pursuant to the Conversion
"Credit Facility" the up to US$44.7 million credit facility
entered into between INGA and Otkritie
on 14 November 2014
"Development Facility" the up to US$100.0 million development
facility entered into between INGA and
Otkritie on 14 November 2014
"Development Facility the Group achieving a cumulative production
Covenant" target of at least 642,910 barrels (equivalent
to 3,552 barrels of oil per day) in the
first half of 2015
"Development Facility the second tranche of US$50.0 million
Second Tranche" of the Development Facility (expected
to be available in July 2015)
"Development Plan" the development plan which the Company
will follow from Completion and up to
the end of 2015,
"Directors" the directors of the Company
"Enlarged Share Capital" the issued ordinary share capital of
the Company immediately following the
Restructuring
"Equity Implementation the implementation agreement dated 14
Agreement" November 2014 between the Company, the
Related Party Shareholders and Mirella
"Excess Application Facility" the facility for qualifying Shareholders
to apply for Excess Shares in excess
of their Open Offer Entitlements
"Excess Shares" up to 78,000,000 Open Offer Shares which
may be applied for in addition to Open
Offer Entitlements pursuant to the Excess
Application Facility
"Existing Facility" the facility agreement entered into between
Ruspetro LLC and Sberbank in the amount
of US$250 million on 30 April 2008 and
which Sberbank assigned to Sberbank Capital
prior to the date of this announcement
"FCA" the United Kingdom Financial Conduct
Authority
"FSMA" the Financial Services and Markets Act
2000 (as amended)
"Further Limolines Loan" the US$10.0 million unsecured short term
loan between Limolines and the Company,
dated 22 August 2014
"General Meeting" the general meeting of the Company expected
to be held at 10.00 a.m. on 5 December
2014 for the purposes of voting on the
Resolutions
"Group" the Company and its consolidated subsidiaries
and subsidiary undertakings from time
to time, taken as a whole
"Guaranteed Net Proceeds the minimum net proceeds of approximately
of the Restructuring" US$40.2 million from the guaranteed proceeds
of the Placing and Open Offer, the Credit
Facility and the first tranche of US$50.0
million of the Development Facility,
less expenses of US$7.5 million
"Independent Shareholders" the Shareholders, excluding the Related
Party Shareholder(s) who are themselves
party to the related party transaction
in question, and therefore precluded
from voting on the relevant Related Party
Resolution
"INGA" OAO INGA, a subsidiary of the Company
incorporated as an open joint stock company
in Russia
"Limolines" Limolines Transport Limited, a company
incorporated under the laws of Cyprus
and controlled by Andrey Likhachev and
Altera IF
"Limolines Shareholder the loan agreement entered into between
Loan" RHL and Limolines on 23 April 2008 in
the amount of US$50.0 million (as amended
from time to time)
"Listing Rules" the listing rules of the UKLA made under
section 74(4) of FSMA, as amended
"London Stock Exchange" London Stock Exchange plc
"Major Breach" a breach of the New Debt Facilities Covenants
by more than 25 per cent. for two consecutive
quarters or by more than 45 per cent.
for any one quarter
"Makayla" Makayla Investments Limited, a company
incorporated under the laws of the British
Virgin Islands and wholly owned by Andrey
Rappoport
"Makayla Entities" Makayla and its associate, being Sega
Wealth
"Makayla Shareholder the facility agreement entered into between
Loan" RHL and Makayla on 5 August 2010 in the
amount of US$15.0 million (as amended
from time to time)
"Mastin" Mastin Holdings Limited, a company incorporated
under the laws of Cyprus and beneficially
owned by Sergey Gordeev
"Minor Breach" a breach of the New Debt Facilities Covenants
by more than 25 per cent., but less than
45 per cent. for any one quarter
"Mirella" Mirella Investments Limited, a company
incorporated under the laws of the British
Virgin Islands and controlled by Alexander
Chistyakov and Andrey Rappaport
"Nervent" Nervent Limited, a company incorporated
under the laws of the British Virgin
Islands, and owned by Alexander Chistyakov
and Tom Reed
"Nervent Entities" Nervent and its associates, being BTL
and Roony
"New Debt Facilities" the New Facility, the Credit Facility
and the Development Facility
"New Debt Facilities certain EBITDA and production covenants
Covenants" which will be tested on a quarterly basis
from 1 January 2016
"New Facility" the US$150.0 million term loan entered
into between INGA and Otkritie on 14
November 2014
"New Ordinary Shares" the Open Offer Shares, the Placing Shares,
the Conversion Shares and the Settlement
Shares
"Notice of General Meeting" the notice of the General Meeting which
will be set out at the end of the Prospectus
"Official List" the Official List of the UKLA
"Open Offer" the offer to qualifying Shareholders
to apply for the Open Offer Shares
"Open Offer Entitlement" an entitlement to apply for Open Offer
Shares allocated to a qualifying Shareholder
pursuant to the Open Offer
"Open Offer Shares" the 183,359,814 New Ordinary Shares being
offered by Ruspetro to qualifying Shareholders
pursuant to the Open Offer
"Ordinary Shares" or the ordinary shares of 10 pence each
"Shares" in nominal value in the capital of the
Company
"Otkritie" "Bank Otkritie Financial Corporation"
(Open Joint Stock Company)
"Palyanovo Block" the Group's Palyanovo licence block covering
an area of approximately 180.5 square
kilometres
"PI Block" the Group's Pottymsko-Inginsky licence
block covering an area of approximately
685 square kilometres
"Placing" up to 150,188,572 New Ordinary Shares
to be subscribed by the Underwriting
Shareholders pursuant to the terms of
the Equity Implementation Agreement
"Placing Shares" the New Ordinary Shares issued by Ruspetro
in connection with the Placing
"Prospectus" the prospectus to be issued shortly in
connection with the Restructuring
"Put Option" the put option in respect of the Put
Option Shares pursuant to the Put Option
Agreement
"Put Option Agreement" the put option deed entered into by Sberbank
Capital and the Company on 2 December
2011 (amended on 6 March 2014)
"Put Option Shares" the 10,362,632 Ordinary Shares which
Mastin agreed to acquire from Sberbank
Capital on 14 November 2014
"Qualifying Shareholders" Qualifying Shareholders
"Related Party Directors" Alexander Chistyakov, Tom Reed and Kirill
Androsov
"Related Party Resolutions" the three Resolutions which relate to:
(i) the Limolines Entities' participation
in the Restructuring; (ii) the Nervent
Entities' participation in the Restructuring;
and (iii) the Makayla Entities' participation
in the Restructuring
"Related Party Shareholders" Limolines, Makayla, Sega Wealth, Nervent,
BTL and Roony
"Related Party Transactions" (i) the participation in the Placing
by the Underwriting Shareholders, (ii)
the set-off of the Company's repayment
obligation under, and the early repayment
of, the Further Limolines Loan against
the payment obligation of Limolines on
the subscription for certain Placing
Shares, (iii) the agreement to pay 25
per cent. of the Group's free cash flow
in repayment of the Limolines Shareholder
Loan (a) after any payment of the Group's
free cash flow is made to Otkritie under
the New Debt Facilities and (b) only
after the Makayla Shareholder Loan has
been repaid in full and (iv) the payment
in May 2015 of US$5.0 million in accrued
interest under the Makayla Shareholder
Loan and the agreement to pay 25 per
cent. of the Group's free cash flow in
repayment of the Makayla Shareholder
Loan after any payment of the Group's
free cash flow is made to Otkritie under
the New Debt Facilities
"Resolutions" the resolutions to be proposed at the
General Meeting
"Restructuring" (i) the acquisition of the Existing Facility,
Put Option Shares and Put Option by Mastin,
(ii) the Placing and Open Offer (iii)
the Conversion and cancellation of the
Put Option, (iv) the issue of New Ordinary
Shares, (v) the entry into the New Debt
Facilities and repayment of the Existing
Facility, (vi) the extension of the Makayla
Shareholder Loan and the Limolines Shareholder
Loan and (vii) the repayment of the Further
Limolines Loan
"RHL" Ruspetro Holding Limited, an intermediate
holding company of the Group incorporated
in Cyprus
"Roony" Roony Invest & Finance S.A., a company
beneficially owned and controlled by
Alexander Chistyakov
"Sberbank" "Sberbank" of Russia
"Sberbank Capital" Sberbank Capital LLC
"Sega Wealth" Sega Wealth Management Limited, a company
beneficially owned and controlled by
Andrey Rappoport
"Settlement Shares" the New Ordinary Shares to be issued
to Mastin in exchange for cancelling
the Company's potential obligation to
purchase the Put Option Shares
"Shareholder Loans" the Limolines Shareholder Loan and Makayla
Shareholder Loan
"Shareholders" holders of Ordinary Shares
"Strand Hanson" Strand Hanson Limited
"Trans-oil" OAO Trans-oil, a subsidiary of the Company
incorporated as an open joint stock company
in Russia
"UKLA" the UK Listing Authority, being the FCA
acting in its capacity as the competent
authority for the purposes of FSMA
"Upside Development Plan" the development plan which, subject to
drawing down the Development Facility
Second Tranche, the Company will follow
instead of the Development Plan for the
period beginning July 2015 to December
2015
"Underwriting Shareholders" Limolines, Makayla and Nervent
"VI Block" the Group's Vostochno-Inginsky licence
block covering an area of approximately
340 square kilometres
Forward-looking statements
This announcement includes "forward-looking information" within
the meaning of Section 27A of the Securities Act, and Section 21E
of the Securities Exchange Act of 1934, as amended. All statements
other than statements of historical fact are, or may be deemed to
be, forward-looking statements. These forward-looking statements
are not based on historical facts, but rather reflect Ruspetro's
current expectations concerning future results and events and
generally may be identified by the use of forward-looking words or
phrases such as "believe", "aim", "expect", "anticipate", "intend",
"foresee", "forecast", "likely", "should", "planned", "may",
"estimated", "potential" or other similar words and phrases.
Similarly, statements that describe Ruspetro's objectives, plans or
goals are or may be forward-looking statements.
These forward-looking statements involve known and unknown
risks, uncertainties and other factors that may cause Ruspetro's
actual results, performance or achievements to differ materially
from the anticipated results, performance or achievements expressed
or implied by these forward-looking statements. Although the
Company believes that the expectations reflected in these
forward-looking statements are reasonable, no assurance can be
given that such expectations will prove to have been correct.
Disclaimer
This announcement is not intended to and does not constitute or
form part of any offer to sell or invitation to purchase, otherwise
acquire, subscribe for, sell or otherwise dispose of, any
securities or the solicitation of any vote or approval in any
jurisdiction pursuant to the proposals set out herein or otherwise,
nor shall it (or the fact of its distribution) form the basis of,
or be relied on in connection with, any contract therefor or be
considered a recommendation that any investor should subscribe for
or purchase or invest in any securities.
Any such offer or invitation will be made solely by means of the
Prospectus to be published by the Company in due course. This
announcement has not been examined or approved by the Financial
Conduct Authority (the "FCA") or any other regulatory authority.
The distribution for this announcement in certain jurisdictions may
be restricted by law and therefore persons into whose possession
this announcement comes should inform themselves about and observe
any such restrictions. Any failure to comply with these
restrictions may constitute a violation of the securities laws of
any such jurisdiction.
The securities referred to herein have not been and will not be
registered under the US Securities Act of 1933 as amended (the
"Securities Act") or under any US state securities laws and may not
be offered or sold within the United States unless any such
securities are registered under the Securities Act or an exemption
from the registration requirements of the Securities Act and any
applicable state laws is available.
Strand Hanson Limited, which is authorised and regulated in the
United Kingdom by the FCA has been appointed as Sponsor to the
Company in connection with the Restructuring. Strand Hanson Limited
will not be responsible to anyone other than the Company for
providing the protections afforded to clients of Strand Hanson
Limited nor for providing advice in relation to the Restructuring,
the content of this announcement or any matter referred to
herein.
Mirabaud Securities LLP, which is authorised and regulated in
the United Kingdom by the FCA, has been appointed as broker to the
Company in connection with the Restructuring. Mirabaud Securities
LLP is acting exclusively for the Company and for no one else in
connection with the Restructuring and will not be responsible to
anyone other than the Company for providing the protections
afforded to clients of Mirabaud Securities LLP nor for providing
advice in relation to the Restructuring, the content of this
announcement or any matter referred to herein.
Neither the content of the Company's website nor any website
accessible by hyperlinks to the Company's website is incorporated
in, or forms part of, this announcement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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