TIDMIOG TIDMRRE
RNS Number : 9471T
Independent Oil & Gas PLC
25 March 2019
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 OR REGULATIONS OF THAT
JURISDICTION
FOR IMMEDIATE RELEASE
25 March 2019
Response to RockRose Energy plc offer for IOG debt
The Board of Directors of Independent Oil & Gas plc ("IOG"
or the "Company") notes the announcement by RockRose Energy plc
("RockRose") of its approach to Smith & Williamson LLP (acting
as joint administrators of LOG; the "Administrators") to acquire
the entire debt due with accrued interest to London Oil and Gas
Limited (in administration) ("LOG") from IOG for the sum of GBP40
million in cash (the "RRE Debt Offer").
The RRE Debt Offer significantly undervalues LOG's interest in
IOG, and IOG itself
The RRE Debt Offer cannot reasonably be described as "fair and
generous". Instead, it demonstrates RockRose's intention to acquire
the loans at substantially below not only their fundamental value
but also at a substantial discount to the see-through value of the
already opportunistic Possible Offer, to the detriment of the
creditors of LOG and LCF, while exploiting the unfortunate
circumstances of holders of "mini-bonds".
In relation to the RRE Debt Offer, the Board of IOG makes the
following observations:
-- The RRE Debt Offer of GBP40 million seeks to acquire LOG's
convertible and non-convertible loans at around their current face
value of GBP38.66 million. RockRose's valuation therefore ascribes
minimal value to the conversion rights attached to LOG's
convertible loans;
-- The RRE Debt offer itself lacks clarity: it is unclear
whether or not the RRE Debt Offer contemplates or attaches any
value to LOG's warrants in IOG;
-- On 5 March, RockRose announced the terms of a possible offer
for the entire issued and to be issued share capital of IOG (the
"Possible Offer"), ascribing a value of 20 pence per IOG share;
-- Under the Takeover Code, if RockRose were to make an offer
for IOG, it would be required to make an "appropriate" offer or
proposal to holders of subscription rights, including LOG as a
result of its convertible interests in IOG. The Takeover Panel's
guidance (as set out in Practice Statement No 24) provides that an
appropriate offer for such securities will normally need to be for
no less than their see-through value i.e. the value of LOG's
convertible instruments by reference to the terms of the Possible
Offer;
-- Based on the terms of the Possible Offer, LOG's convertible
loans have a see-through value of GBP41.1 million and LOG's 8p and
11.9p warrants have a combined see-through value of GBP1.4 million
(together, GBP42.5 million - the "Convertible See-Through Value").
Absent the exceptional agreement of the Administrators to accept an
offer or proposal for the convertible instruments at a lower value,
the Convertible See-Through Value of GBP42.5 million would be the
minimum "appropriate" consideration payable to LOG under the terms
of the Possible Offer;
-- Combining this Convertible See-Through Value of LOG's
convertible interests with the GBP15.9 million face value of LOG's
non-convertible instruments, the total underlying value of LOG's
loan and warrant interests in IOG (using RockRose's own Possible
Offer valuation) stands currently at GBP58.4 million; and
-- Excluding warrants, the total underlying value of LOG's loan
interests is GBP57.0 million, yet the RRE Debt Offer is at just
GBP40 million - a 30% discount.
Taken together, it is clear that the RRE Debt Offer is a
transparent attempt by RockRose to deny LOG's and LCF's creditors,
and by extension mini-bond holders, of fundamental value, seeking
instead to reserve that value for the benefit of RockRose and
Andrew Austin himself (as a major shareholder in RockRose).
Repeated rejection of RockRose's Possible Offer for IOG
As announced on 5 March, the Board of IOG believes that the
Possible Offer is opportunistic and materially undervalues the
Company and does not attribute fair value to either IOG's assets or
their significant future upside.
The Board therefore unanimously concluded to reject this
proposal unequivocally, and continues to focus its efforts on
unlocking additional value for all IOG stakeholders by securing a
farm-out partner for its core project to provide funding
optionality, in parallel with advancing IOG's stated capital
markets funding plans.
The Board's rejection of RockRose's approach was given with the
full support of LOG and the administrators of LCF. Since that
rejection, there has been no substantive engagement by RockRose
with IOG, with RockRose seemingly electing instead to focus its
efforts on pushing the Administrators to accept its derisory offer
for LOG's interests in IOG.
LOG's interests in IOG
LOG's interests in IOG comprise convertible and non-convertible
loans, and warrants, as set out below. The key terms of the loans
are all in the public domain as a result of IOG's announcements on
7 December 2015, 11 December 2015, 5 February 2016, 21 February
2018 and 17 August 2018.
The Board of IOG is satisfied that all its disclosure and other
regulatory obligations have been met.
Instrument Issue Principal Drawn down principal Conversion Maturity Conversion
Date amount and accrued Price (p) date rights (# IOG
(GBPm) interest (GBPm) shares)
--------------- -------- --------- -------------------- ---------- -------- --------------
Non-convertible interests
Loan Dec-15 2.75 3.45 N/A 2019-20 N/A
Loan Dec-15 0.80 1.07 N/A Oct-19 N/A
Loan Sep-18 15.00 11.42 N/A 2021-22 N/A
Convertible interests
Warrants Dec-15 N/A N/A 8.00 Dec-19 7,500,000
Warrants Dec-15 N/A N/A 11.90 Dec-19 5,777,310
Warrants Sep-18 N/A N/A 32.18 Aug-23 20,000,000
Convertible Feb-16 10.00 11.87 8.00 2019-21 148,325,470
Convertible Feb-18 10.00 10.85 19.00 2021 57,129,639
--------------- -------- --------- -------------------- ---------- -------- --------------
38.55 38.66 238,732,419
Accrued interest on the loans is calculated as at 28 February
2019.
Fiona MacAulay, Chair of IOG, said:
"The Board of IOG is focused on delivering value to our
stakeholders via our already announced strategy to achieve FID for
our sanction-ready portfolio of UK Southern Gas Basin gas fields.
We are making good progress with shortlisted partners on our
farm-out process and continue to believe that our strategy will
deliver significantly better stakeholder returns than RockRose's
derisory proposals. It is disappointing to see RockRose trying to
take advantage of LCF's mini-bond holders by offering them a
significant discount to the opportunistic possible offer to IOG
shareholders, which already materially undervalues the
Company."
Enquiries:
Independent Oil & Gas plc
Andrew Hockey (CEO)
James Chance (CFO) +44 (0) 20 3879
Rupert Newall (Head of Corporate Finance) 0510
Peel Hunt LLP (Joint Rule 3 Adviser and Joint
Financial Adviser)
Richard Crichton, Michael Nicholson, David McKeown, +44 (0) 20 7418
Sam Turton 8900
finnCap Ltd (NOMAD, Joint Rule 3 Adviser and
Joint Financial Adviser) +44 (0) 20 7220
Christopher Raggett, Henrik Persson, Simon Hicks 0500
Vigo Communications +44 (0) 20 7390
Patrick d'Ancona, Chris McMahon 0230
Further information
Peel Hunt LLP, which is authorised and regulated by the
Financial Conduct Authority in the United Kingdom, is acting
exclusively for IOG and for no one else in connection with the
subject matter of this announcement and will not be responsible to
anyone other than IOG for providing the protections afforded to its
clients or for providing advice in connection with the subject
matter of this announcement.
finnCap Ltd, which is authorised and regulated by the Financial
Conduct Authority in the United Kingdom, is acting exclusively for
IOG and for no one else in connection with the subject matter of
this announcement and will not be responsible to anyone other than
IOG for providing the protections afforded to its clients or for
providing advice in connection with the subject matter of this
announcement.
Disclosure requirements of the Takeover Code
Under Rule 8.3(a) of the Takeover Code, any person who is
interested in 1 per cent. or more of any class of relevant
securities of an offeree company or of any securities exchange
offeror (being any offeror other than an offeror in respect of
which it has been announced that its offer is, or is likely to be,
solely in cash) must make an Opening Position Disclosure following
the commencement of the offer period and, if later, following the
announcement in which any securities exchange offeror is first
identified. An Opening Position Disclosure must contain details of
the person's interests and short positions in, and rights to
subscribe for, any relevant securities of each of (i) the offeree
company and (ii) any securities exchange offeror(s). An Opening
Position Disclosure by a person to whom Rule 8.3(a) applies must be
made by no later than 3.30 pm (London time) on the 10th Business
Day following the commencement of the offer period and, if
appropriate, by no later than 3.30 pm (London time) on the 10th
Business Day following the announcement in which any securities
exchange offeror is first identified. Relevant persons who deal
in the relevant securities of the offeree company or of a
securities exchange offeror prior to the deadline for making an
Opening Position Disclosure must instead make a Dealing
Disclosure.
Under Rule 8.3(b) of the Takeover Code, any person who is, or
becomes, interested in 1 per cent. or more of any class of relevant
securities of the offeree company or of any securities exchange
offeror must make a Dealing Disclosure if the person deals in any
relevant securities of the offeree company or of any securities
exchange offeror. A Dealing Disclosure must contain details of the
dealing concerned and of the person's interests and short positions
in, and rights to subscribe for, any relevant securities of each of
(i) the offeree company and (ii) any securities exchange
offeror(s), save to the extent that these details have previously
been disclosed under Rule 8. A Dealing Disclosure by a person to
whom Rule 8.3(b) applies must be made by no later than 3.30 pm
(London time) on the Business Day following the date of the
relevant dealing.
If two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire or control an
interest in relevant securities of an offeree company or a
securities exchange offeror, they will be deemed to be a single
person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree
company and by any offeror and Dealing Disclosures must also be
made by the offeree company, by any offeror and by any persons
acting in concert with any of them (see Rules 8.1, 8.2 and
8.4).
Details of the offeree and offeror companies in respect of whose
relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table on
the Panel's website at www.thetakeoverpanel.org.uk, including
details of the number of relevant securities in issue, when the
offer period commenced and when any offeror was first identified.
You should contact the Panel's Market Surveillance Unit on +44
(0)20 7638 0129 if you are in any doubt as to whether you are
required to make an Opening Position Disclosure or a Dealing
Disclosure.
Publication on website
A copy of this announcement will be made available, subject to
certain restrictions relating to persons resident in restricted
jurisdictions, on Independent Oil & Gas plc's website
www.independentoilandgas.com no later than 12 noon (London time) on
the Business Day following this announcement. For the avoidance of
doubt, the content of this website is not incorporated by reference
into, and does not form part of, this announcement.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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