RNS Number:6370I
KP Renewables PLC
28 November 2007
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR
FROM CANADA, AUSTRALIA OR JAPAN
KP Renewables plc (the "Company" or "KPR")
Proposed acquisition of Island Gas Limited by means of a Scheme of Arrangement
under section 425 of the Companies Act 1985
Admission to trading on AIM
Waiver under Rule 9 of the Takeover Code
Change of name to Island Gas Resources plc ("IGas")
Share Consolidation
Appointment of Directors
and
Notice of Extraordinary General Meeting
The Board of KP Renewables is pleased to announce that we have reached agreement
on the terms of a recommended proposal whereby the Company will acquire the
entire issued and to be issued share capital of Island Gas Limited ("IGL"). IGL
is a coal bed methane ("CBM") company seeking to produce and market methane gas
for industrial and domestic use from virgin coal seams within its onshore UK
acreage. Further details about IGL are given below.
In the Company's circular to Shareholders, on 16 March 2007, it was stated that
the Board was giving consideration to a significant further fund raising to
support investment in a sizeable project or to the acquisition of another
business. On 2 November 2007 the company announced that it had raised #900,000
by the issue of loan notes (the "Loan Notes") in order to progress its stated
strategy. The Board view IGL as an attractive opportunity due to the scale,
quality of its assets and its management.
Pursuant to the terms of the Acquisition, IGL Shareholders will receive
Consideration Shares with an aggregate value of #50 million at the Purchase
Price.
The Acquisition is to be implemented by means of a scheme of arrangement under
Section 425 of the Act. Pursuant to the AIM Rules, the Acquisition will
constitute a reverse takeover. It is, therefore, subject to Shareholder approval
which will be sought at an Extraordinary General Meeting to be held at 12.00
mid-day on 27th December at the offices of Morrison & Foerster MNP, 7th Floor,
CityPoint, One Ropemaker Street, London EC2Y 9AW.
The Acquisition is also a "qualifying event" for the purposes of triggering the
mandatory conversion of the Company's outstanding Loan Notes which will convert
into a total of 81,818,150 Existing Ordinary Shares (equivalent to 1,636,363 New
Ordinary Shares) subject to the completion of the Acquisition and the passing of
the Resolutions.
The proposed Acquisition constitutes a material change to the Company's existing
operations and will also result in the disposal of the Existing Projects to
Blenheim Energy Limited, a third party purchaser. For this reason the Company is
also convening a meeting of the eligible creditors who are party to the CVA to
vary and discharge the CVA arrangements and approve the disposal of the Existing
Projects. The creditors meeting will take place at 11.45 am on the same date and
at the same place as the Extraordinary General Meeting.
In view of the size of the transaction in relation to KPR, the Acquisition
constitutes a reverse-takeover of IGL by KPR under Rule 14 of the AIM Rules and
is therefore conditional on the consent of the KPR Shareholders being given at
an extraordinary general meeting. The proposals are also conditional on the
consent of KPR Shareholders to the waiver of the obligation that would otherwise
arise from the IGL Shareholders to make an offer for KPR under Rule 9 of the
Takeover Code. Such consents will be sought at the EGM, notice of which will be
included the AIM Admission Document.
The directors of KPR, who have been so advised by Libertas Capital Corporate
Finance Limited, consider the terms of the proposals to be fair and reasonable.
In providing its advice, Libertas Capital Corporate Finance Limited has taken
into account the commercial assessment of the directors of KPR.
The directors of KPR consider that the Resolutions to be proposed at the EGM are
in the best interests of KPR and Shareholders as a whole. Accordingly, the KPR
directors intend unanimously to recommend that Shareholders vote in favour of
the Resolutions to be proposed at the EGM, as they have irrevocably undertaken
to do in respect of their own beneficial holdings amounting to, in aggregate,
4,518,500 Existing Ordinary Shares (representing approximately 11.24 per cent.
of the existing issued share capital of KPR).
An AIM Admission Document relating to KPR and the Enlarged Group has been
published today and is available electronically on KPR's website at
www.kprplc.com. The AIM Admission Document has been sent to Shareholders. It is
expected that the suspension of trading of the Existing Ordinary Shares on AIM
will be lifted shortly.
Board Changes
It is proposed that Francis Gugen, Andrew Austin and Brent Cheshire (the
"Proposed Directors") will join the Board of the Company; Peter Redmond and
Richard Armstrong will remain on the board as Non-Executive Directors; and John
Bryant will step down as Non-Executive Chairman and be appointed as
Non-Executive Director. David Lindley has tendered his resignation, which became
effective on 27 November 2007. The Board would like to express its thanks to Dr
Lindley for his contribution to the Company's turnaround.
For further information contact
KP Renewables Plc
John Bryant, Chairman Tel +44 (0) 207 332 2200
Peter Redmond, Director Tel +44 (0) 207 332 2200
Libertas Capital
Jakob Kinde, Stephen Pickup Tel +44 (0) 207 569 9606
Website www.kprplc.com
Island Gas Limited c/o Gavin Anderson
Ken Cronin/Kate Hill Tel +44 (0) 207 554 1400
Notes to Editors
Island Gas Resources
Founded in 2003, Island Gas Limited (IGL) is one of the UK's leading onshore gas
companies. Island Gas Limited was set up to produce and market the methane gas
which is found in seams of coal. The coal seam both generates and traps the gas,
which can be extracted by drilling horizontally into the seam and collected for
use as fuel. Coal Bed Methane is exactly the same as other forms of natural gas,
and is used to provide both industrial and domestic power and has the potential
to be an important new source of energy for the UK. The CBM industry in the UK
is in its infancy, but with the continuing decline in natural gas from the North
Sea, it is likely to become an increasingly attractive alternative potential
source of gas. CBM has become a significant source of gas both in North America
and Australia over a relatively short period of time during which both have seen
an almost exponential growth in CBM production
Longer-term
Island Gas Limited (IGL) was founded in 2003. IGL has ownership interests in the
UK ranging from 20% to 50% in eight Petroleum and Exploration Development
Licences (PEDLs), 100% ownership of two methane drainage licences (MDLs) and 50%
ownership of three off shore blocks under one seaward petroleum production
licence (SPPL) The Licences cover a gross area of approximately 1,000 sq km and
according to experts, who have reviewed seven of the nine licences, the mid case
estimate of IGL's share of Gas Initially In Place (GIIP) is893billion cubic feet
(bcf), or 140milllion barrels of oil equivalent. IGL's areas of operation are
Cheshire (around Warrington), Yorkshire (around Goole), Staffordshire (around
Newcastle-under-Lyme) and the North Wales coast (towards Prestatyn).
Background to IGL
IGL is a coal bed methane ("CBM") company seeking to produce and market methane
gas for industrial and domestic use from virgin coal seams within its onshore UK
acreage. This requires acreage to be explored, appraised and developed and in
connection with which Island also provides technical and other related services.
CBM is a natural gas found in seams of coal. However, whereas in a natural gas
offshore reservoir, such as sandstone, the gas is held in the void spaces within
the rock, in onshore coal the gas is principally retained on the surface of the
coal within the micropore structure.
The CBM industry in the UK is in its infancy, but with the continuing decline in
natural gas from the North Sea, it is likely to become an increasingly
attractive alternative potential source of gas. CBM has become a significant
source of gas both in North America and Australia over a relatively short period
of time during which both have seen an almost exponential growth in CBM
production. Through improvements in drilling and development techniques adopted
by a number of world renowned companies, CBM is now a competitive source of gas.
IGL has ownership interests ranging from 20 per cent. to 50 per cent. in eight
Petroleum and Exploration Development Licences ("PEDLs") and 50 per cent,
ownership of three onshore blocks held under one seaward petroleum production
licence ("SPPL") in the UK (the "Licences"). These Licences cover a gross area
of approximately 1,000 sq km and the risk weighted mid case estimate of IGL's
share of Gas Initially in Place (GIIP) is 893 bcf, IGL's joint venture partner
that holds the residual 50 per cent. to 80 per cent. ownership interests in the
Licences is Nexen Exploration U.K. Limited, a subsidiary of Nexen Inc, a Toronto
and New York Stock Exchange listed global energy company with a market
capitalisation of approximately C$16bn ("Nexen").
When IGL became active in CBM, several factors began to change the potential for
the development of CBM in the UK:
1. Developments in Drilling Technology: The application of lateral drilling
technology in coals, initially pioneered in the US, offers the opportunity for
CBM developments to:
* access more coal surface from the same mother bore well, thereby providing the
potential to access more coal at lower cost and to improve production and
economics; and
* with a much lower geographical footprint, address one of the hurdles to
development in the UK. Lateral wells of which many have been drilled in the US,
offer the potential to reduce the number of surface locations by a factor of 10,
when compared with vertical wells draining the same area.
2. Security of Supply concerns: The political outlook on oil, gas and coal
projects in the UK has recently changed to view such projects in a more
favourable light as a result of growing awareness of the UK's current reliance
on energy from these sources in addition to the country's increasing dependence
in imports of such energy.
3. Entrance of E&P Multi-national corporations to UK CBM: During this period,
several large multinational E&P companies have formed partnerships with existing
UK CBM players as IGL has done with Nexen.
IGL's immediate objectives are to:
* commence initial gas sales from CBM production from at least one
property by the end of 2008;
* secure routes to market with a focus on electricity generation and
access to the gas network;
* continue gathering data and production experience to allow a proportion
of GIIP to be classified as "recoverable resource";
* fulfil well obligations on licences as necessary to secure ownership
into upcoming second terms; and
* apply for acreage, together with Nexen, in the recently announced 13th
licensing round.
Biographical information of the Proposed Directors is provided below.
Mr Francis Gugen, Proposed Executive Chairman, aged 58
Francis Gugen is the found, majority owner and Executive Chairman of IGL.
Francis has over thirty years oil and gas industry experience. Between 1982 and
2000 he helped grow Amerada Hess in North West Europe, ultimately becoming CEO.
He is a member of the CBI's Energy Policy and Economic affairs Committees. He is
currently a Non-Executive Director, Vice Chairman of the Board and Chairman of
the audit committee of Petroleum Geophysical Services ASA and a Non-Executive
Director and member of the audit committee of the Britannia Building Society. Mr
Gugen is also the non executive chair of Chrysaor Limited a new company focused
on developing North Sea oil and gas fields with equity investors Barcap and
Natural Gas Partners IX, LP) and of Fraudscreen Limited a new financial services
business.
Mr Andrew Austin, Proposed Chief Executive Officer, aged 42
Andrew Austin is the Chief Executive Officer of IGL. Mr Austin specialises in
energy projects in the gas, electricity and renewables sector. He has been
involved in ventures as principal and has also raised substantial funds of
private and public equity for clients during the course of his career to date.
Mr Austin spent 17 years working in investment banking in the City of London
with Merrill Lynch, Nomura, Citibank and Barclays Capital. Latterly he was
General Manager of Creditanstalt Investment Bank in London. He also has six
years of management and consultancy experience with clean tech companies
including Generics Group and Whitfield Solar.
Mr Austin has been an executive director of IGL since 2004 and has been
responsible for day to day operations and business development throughout that
period.
Mr Brent Cheshire, Proposed Executive Technical Director, aged 52
Brent Cheshire is the Technical Director of IGL. After 14 years at Shell, Mr
Cheshire joined Amerada Hess in 1991, where he had a range of roles culminating
in Senior VP E&P Worldwide Technology and CEO Scandinavia. Mr Cheshire has
significant experience in geology, drilling technology and project management
and is managing director of DONG E&P (UK) Limited.
Further information on the Proposed Directors as required by the AIM Rules is
set out in the Appendix.
Libertas Capital Corporate Finance Limited, which is regulated in the United
Kingdom by the FSA, is acting for KPR and no one else in connection with the
arrangements described in this announcement and will not be responsible to
anyone other than KPR for providing the protections afforded to clients of
Libertas, nor for providing advice in relation to the proposal, any acquisition
of shares or securities in KPR or any other matter referred to in this
announcement.
The distribution of this announcement in jurisdictions other than the United
Kingdom may be restricted by law and therefore persons into whose possession
this announcement comes should inform themselves about, and observe, such
restrictions. Any failure to comply with the restrictions may constitute a
violation of the securities laws of any such jurisdiction. This announcement has
been prepared for the purposes of complying with English law and the AIM Rules
and the information disclosed may not be the same as that which would have been
disclosed if this announcement has been prepared in accordance with the laws and
regulations of any jurisdiction outside the United Kingdom. This announcement
does not constitute an offer to purchase, sell or exchange or the solicitation
of an offer to purchase, sell or exchange any securities or the solicitation of
any vote or approval in any jurisdiction pursuant to the proposal or otherwise,
nor shall there be any purchase, sale or exchange of securities or such
solicitation in any jurisdiction in which such offer, solicitation or sale or
exchange would be unlawful under the laws of such jurisdiction. This
announcement does not constitute a prospectus, a prospectus equivalent document
or an AIM admission document. Investors and prospective investors in IGL and/or
KPR are advised to read carefully the formal documentation in relation to the
proposal once it has been despatched.
Neither the content of any website of KPR or IGL (or any other website) nor the
content of any website accessible from hyperlinks on any such website (or any
other website) is incorporated into, or forms part of, this announcement.
APPENDIX
The following information on the Proposed Directors is given in accordance with
the AIM Rules. Other than the information contained in this announcement, there
are no other details to be disclosed in accordance with paragraph (g) of
Schedule Two of the AIM Rules.
None of the Proposed Directors are, nor have been within the five years prior to
the publication of this document, partners in any partnerships. The Proposed
Directors have held the following directorships within the five years prior to
the publication of this document.
Director Current Directorships Past Directorships
Francis Gugen Britannia Building CH4 Energy Limited
Society CH4 Limited
Chrysaor Holdings Limited CH4 Pipelines Limited
Gugen Consulting Limited Permagas Limited
Echo Petroleum Limited Stratagas CBM Limited
Fraudscreen Limited Stratagas Plc
Petroleum Geo-Services
ASA
Raft Trustees Limited
Andrew Austin Austin and Austin Limited Recombinagen Limited
Trafalgar Marine Limited
Trafalgar International
Marine Limited
M.A. Keeping Limited
Whitfield Solar Limited
Brent Cheshire Cheshire Energy Resources Amerada Hess Energy Aps
Limited Amerada Hess Nominees
Dong E&P (UK) Limited Limited
Amerada Hess Limited
Amerada Hess NWE Holdings
Amerada Hess
International LLC
Amerada Hess Aps
Amerada Hess Scandinavia
Aps
Amerada Hess Norge A/S
United Kingdom Offshore
Operators Association
Limited
None of the Proposed Directors has:
(a) any unspent convictions in relation to indictable offences;
(b) had a bankruptcy order made against him or entered into any individual
voluntary arrangement;
(c) been a director of a company which has been placed in receivership,
compulsory liquidation, creditors' voluntary liquidation or administration or
entered into a company voluntary arrangement or any composition or arrangement
with its creditors generally or any class of its creditors whilst he was a
director of that company at the time of, or within the twelve months preceding,
such events;
(d) been a partner of a firm which has been placed in compulsory liquidation or
administration or which has entered into a partnership voluntary arrangement
whilst he was a partner of that firm at the time of, or within twelve months
preceding, such events;
(e) had any asset belonging to him placed in receivership or been a partner of a
partnership whose assets have been placed in receivership whilst he was a
partner at the time of, or within twelve months preceding, such receivership; or
(f) been publicly criticised by any statutory or regulatory authority (including
any recognised professional body) or ever been disqualified by a court from
acting as a director of a company or from acting in the management or conduct of
the affairs of any company.
The following defined terms have the following meanings in this Announcement:
DEFINITIONS
The following definitions apply throughout this document, unless the context
requires otherwise:
"Acquisition" the proposed acquisition by the Company of the entire
issued and to be issued share capital of IGL pursuant
to the Scheme
"Act" or "Companies the Companies Act 1985, as amended, and the Companies
Acts" Act 2006
"AIM" a market of the London Stock Exchange
"AIM Rules" the rules for AIM companies issued by the London Stock
Exchange (as amended from time to time)
"Board" the board of directors of the Company from time to
time, including a duly constituted committee of such
directors
"CBM" Coal Bed Methane
"Consideration 55,555,365 New Ordinary Shares to be issued fully paid
Shares" to the IGL Shareholders pursuant to the Scheme
"Court" the High Court of Justice in England and Wales
"CVA" the company voluntary agreement pursuant to Part I of
the Insolvency Act 1986 of the Company approved on
10 April 2007
"Enlarged Group" the Company and its subsidiary undertakings as at the
date of Admission which shall include IGL
"Existing Ordinary the 84,661,610 Ordinary Shares in issue at the date of
Shares" this Announcement
"Existing Projects" certain opportunities in the wind generation sector
which were being pursued by the Company prior to the
date of the CVA
"Extraordinary the extraordinary general meeting of the Company to be
General Meeting" or held at 12.00 midday on 27 December 2007
"EGM"
"IGL Shareholders" the holders of IGL Shares being Andrew Austin, Brent
Cheshire, Leigh Dyson, Francis Gugen, Edward Lasseter,
Andrew Purcell, Michael Smith and Roger Smith
"IGL Shares" the outstanding A ordinary shares, B ordinary shares, C
ordinary shares and D ordinary shares, which will be
cancelled upon the Scheme becoming effective, and the
redeemable preference shares in the capital of IGL
which will be repurchased by IGL upon the Scheme
becoming effective
"Loan Notes" the #900,000 of outstanding fixed rate convertible
unsecured loan notes of the Company
"New Ordinary Shares" ordinary shares of 50p each in the capital of the
Company following the consolidation of the Existing
Ordinary Shares pursuant to Resolutions, the
Consideration Shares and (for the avoidance of doubt)
the New Ordinary Shares arising from the conversion of
the Loan Notes
"Ordinary Shares" ordinary shares of 1 pence each in the capital of the
Company
"Proposed Directors" the proposed executive directors of the Company being
together Francis Gugen, Andrew Austin and Brent
Cheshire
"Purchase Price" 90p per Consideration Share being the implied price per
New Ordinary Share at which the Consideration Shares
will be issued and which results from the agreement
made between the Company and IGL as regards their
respective values
"Resolutions" the Resolutions to be proposed at the EGM
"Scheme" the scheme of arrangement for the implementation of the
Acquisition under Section 425 of the Act between IGL
and its shareholders, with or subject to any
modification thereof or any addition thereto or
condition approved or imposed by the Court and agreed
by IGL and the Company
"Shareholders" the holders of Ordinary Shares of the Company
"Takeover Code" the City Code on Takeovers and Mergers
"Takeover Panel" the Panel on Takeovers and Mergers
This information is provided by RNS
The company news service from the London Stock Exchange
END
ACQDGMZMGNLGNZZ
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