TIDMHDY
RNS Number : 5685F
Hardy Oil & Gas plc
15 July 2019
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF REGULATION 596/2014 ("MAR"). UPON THE PUBLICATION
OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS
INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.
15 July 2019
Hardy Oil and Gas plc
(LSE: HDY)
UPDATE ON CONDITIONAL SALE OF HEPI
Hardy Oil and Gas plc ("Hardy" or "Company"), the oil and gas
exploration and production company focussed in India, announced on
1 July 2019 ("Initial Sale Announcement") that it had entered into
a conditional share purchase agreement ("HOEC SPA") to sell its
wholly-owned subsidiary, Hardy Exploration & Production (India)
Inc. ("HEPI") to Hindustan Oil Exploration Company Limited ("HOEC")
for consideration of US$1,500,000 in cash ("HOEC Sale").
Following the release of the Initial Sale Announcement, the
Company received an unsolicited offer of US$3,000,000 in cash from
Invenire Energy Private Ltd ("Invenire") to acquire HEPI ("Invenire
Sale"). The Company now announces, that following this offer, the
Company has entered into a second conditional share purchase
agreement ("Invenire SPA") to sell HEPI to Invenire.
Unless defined herein, defined terms used in this announcement
shall have the same meaning as in the Initial Sale
Announcement.
As outlined in the Initial Sale Announcement (in particular the
section titled "Background to and reasons for the Transaction"),
due to the difficulties arising from the litigation and disputes
associated with the Assets, the Directors have concluded that
disposing of HEPI is in the best interests of the Company and its
shareholders. HEPI has been reliant on the Company to provide it
with funds for it to continue to trade and fund the ongoing
litigation and disputes and such funding obligations are a
significant financial burden on Hardy, particularly when it is not
certain when, or if, any of the Assets will start generating
returns for shareholders.
The offer from Invenire of US$3,000,000 for the acquisition of
HEPI is twice the amount agreed to be paid by HOEC pursuant to the
terms of the HOEC SPA. Accordingly, the Board unanimously believes
that it is in the best interests of the Company and its
shareholders to maximise the value to be realised by the sale of
HEPI and to therefore proceed with the sale of HEPI to
Invenire.
As with the HOEC Sale, the Invenire Sale remains of sufficient
size relative to the Group to constitute a class 1 transaction for
the purposes of the Listing Rules and the Invenire Sale is
therefore conditional upon the approval of the Company's
shareholders. The Company is in the process of preparing a circular
in order to seek approval of the Company's shareholders to the
Invenire Sale and to the associated proposed transfer of the
Company's listing from the Premium Segment of the Official List to
the Standard Segment ("Transfer of Listing") (resulting from the
Group no longer having an independent business under FCA
guidelines). It is expected that the circular will be posted to the
Company's shareholders, together with a notice of an extraordinary
general meeting, within the next few weeks.
Under the terms of the HOEC SPA, the Company has agreed to use
its reasonable endeavours to obtain shareholder approval for the
HOEC Sale and to send a circular to shareholders convening an
extraordinary general meeting by no later than 30 September 2019.
However, these obligations are subject to the Directors' fiduciary
duties. Having regard to the significantly higher value of the
offer from Invenire, the Board have been advised that to proceed
with the HOEC Sale would be in breach of the Directors' fiduciary
duties.
Further announcements will be made by the Company in due course
regarding the Invenire Sale, any competing bids or revised offers
for HEPI and the Transfer of Listing.
Impact of the Invenire Sale
Following completion of the Invenire Sale ("Completion"), HEPI
will cease to be part of the Group and the Company will be a "cash
shell" with no subsidiaries or operational assets. Given the
Company will operate as a "cash shell" post-Completion, the
approval of the Company's shareholders will be sought in relation
to the Transfer of Listing. Completion of the Invenire Sale
requires resolutions approving both the Invenire Sale and the
Transfer of Listing being passed by the Company's shareholders.
Principal Terms of the Invenire Sale
Pursuant to the terms of the Invenire SPA, Invenire has agreed
to acquire the whole of the capital stock of HEPI for cash
consideration of US$3,000,000. The consideration is being held by
the Company's solicitors and will be released to Hardy on
Completion.
Completion of the Invenire Sale is conditional only on the
Company's shareholders passing (i) a resolution approving the
Invenire Sale; and (ii) a resolution approving the Transfer of
Listing. The Company is required, subject to the fiduciary duties
of its Directors, to use its reasonable endeavours to satisfy this
condition by no later than 7 October 2019. Neither the Company nor
Invenire has any right to terminate the Invenire SPA between
signing and Completion and the Invenire SPA is not subject to any
other conditions.
The Company is not giving any warranties, indemnities or tax
covenant to Invenire under the terms of the Invenire SPA except for
warranties as to title to the shares in HEPI, HEPI's share capital
and its capacity to enter into the Invenire SPA and sell the
shares.
As reported in the Initial Sale Announcement, as a result of the
Company's continued financing of HEPI, as of 30 June 2019, HEPI
owed the Company approximately US$124 million by way of an
intra-group debt ("Intra-Group Debt"). As part of the Invenire Sale
the Company proposes to (i) capitalise substantially all of the
Intra-Group Debt at Completion in consideration of the issue by
HEPI of further shares in HEPI; and (ii) waive its rights to the
repayment of the remainder of Intra-Group Debt such that the
remainder of Intra-Group Debt will be written off and HEPI will not
have any indebtedness to the Company following Completion
("Capitalisation and Waiver"). This means that the Intra-Group Debt
will no longer appear in the Company's financial statements. In the
event that Completion does not occur, the Company will not proceed
with the Capitalisation and Waiver and the Intra-Group Debt will
remain outstanding.
Information on Invenire
Invenire is an independent upstream oil and gas company with
producing assets in South East Asia, including India. Access to
talent, technology and capital ably positions Invenire to pursue
exploration and production (E&P) opportunities in the current
market environment. Invenire has been successful in building a
portfolio of assets through acquisitions and also through direct
participation in the Government bidding rounds.
Current Trading, Use of Net Proceeds and Future Prospects
As reported in the Initial Sale Announcement, given the
developments outlined in the 2019 Preliminary Final Results
Announcement, the Directors remain of the view that attempting to
realise some value in respect of the Assets by way of a disposal of
HEPI is in the best interests of the Company and its shareholders.
Following Completion, the Company will transfer its listing from
the Premium Segment to the Standard Segment of the Official List
and the net proceeds from the Invenire Sale will be retained to
provide additional working capital for the Company and will be
added to the Company's cash resources for the Company to seek new
investment opportunities.
Commenting on the Invenire Sale, Alasdair Locke, Chairman, said:
"The Board unanimously considers that the Invenire Sale is in the
best interests of all shareholders. Not only will it reduce
significantly the outgoings associated with HEPI remaining part of
the Group but the price secured by the Board is at a substantially
higher price than that offered by HOEC. The Invenire Sale will
remove a major element of uncertainty for investors and provide the
Company with a significant increase in the amount of its working
capital enabling the Company to seek new investment
opportunities."
For further information please visit www.hardyoil.com or
contact:
Hardy Oil and Gas plc 012 2461 2900
Ian MacKenzie, Chief Executive Officer
Richard Galvin, Treasurer &
Corporate Affairs Executive
Arden Partners plc 020 7614 5900
Ciaran Walsh
Steve Douglas
Equity Sales: James Reed-Daunter
Tavistock 020 7920 3150
Simon Hudson
Barney Hayward
-ends-
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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July 15, 2019 08:57 ET (12:57 GMT)
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