TIDMAEN
RNS Number : 9130L
Andes Energia PLC
24 July 2017
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA,
JAPAN, AUSTRALIA, OR THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER
JURISDICTION IN WHICH IT WOULD BE UNLAWFUL TO DO SO.
The information contained within this Announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 ("MAR"). Upon
publication of this Announcement, this information is now
considered to be in the public domain.
24 July 2017
Andes Energia PLC
Proposed combination with PETSA, Mercuria Energy Group Limited's
Argentine oil and gas exploration and production business and
waiver of obligations under Rule 9 of the City Code
Proposed Board Changes
Proposed change of Company name to Phoenix Global Resources
plc
Andes Energia PLC ("Andes" or the "Company") (AIM: AEN; BCBA:
AEN) is pleased to announce the conditional combination with
Trefoil Holdings, the holding company that indirectly owns over
99.99% of Petrolera El Trébol S.A. ("PETSA"), the operating company
for the oil and gas exploration and production business of Mercuria
Energy Group Limited ("Mercuria EG") in Argentina. The combination
is to be effected through the acquisition of the entire issued
share capital of Trefoil Holdings in consideration for the issue of
1,899,106,385 Consideration Ordinary Shares, up to 46,049,727
Deferred Consideration Shares, the Mercuria Warrants and rights to
be issued the Settled Claim Shares to Upstream Capital, a
subsidiary of Mercuria EG. The Consideration Shares to be issued to
Upstream Capital will represent 75.38% of the Enlarged Share
Capital with existing Andes Shareholders holding 24.62%. The
resulting ownership of Mercuria EG in the Enlarged Group will be
approximately 78%.
In addition, the Company announces proposed changes to the Board
which will be chaired by Sir Michael Rake and its intention to
rename the Enlarged Group as Phoenix Global Resources plc (AIM:
PGR; BCBA: PGR).
The combination of the asset bases in Argentina is expected to
create a stronger Enlarged Group with the potential to develop
conventional and unconventional assets, particularly in Argentina.
The Transaction is expected to generate economic, technical and
operating synergies that the Directors believe will create one of
the leading Argentinian independent exploration and production
companies with significant exposure to the Vaca Muerta formation, a
world class resource. The Enlarged Group will have the following
strengths:
Scale to realise Argentine potential
-- Over 10 million licenced gross acres in Argentina (of which over 5 million are operated)
-- 63 million boe net working interest 2P reserves and
production of over 11,500 net working interest boepd on average in
2016
-- Balanced portfolio of existing production and near-term
production growth potential from identified development
opportunities from its conventional asset base as well as further
growth potential from its unconventional assets which are
predominantly in the Vaca Muerta formation
Strong, independent board
-- Enlarged Group's Board will be chaired by Sir Michael Rake
-- In addition, Board will comprise: Chief Executive Officer,
Anuj Sharma; Chief Financial Officer, Philip Wolfe; and seven
further non-executive directors, of whom four will be
independent
-- Directors and Proposed Directors are committed to the highest
standards of corporate governance
Financial resources to actively pursue the Vaca Muerta
opportunity
-- Work programme to be funded through Bridging and Working
Capital Facilities Agreement with an affiliate of Mercuria EG,
comprised of a Term Loan in the principal amount of approximately
US$87 million and a revolving credit facility in the principal
amount of approximately US$73 million, conditional on Completion
and Admission
-- Enlarged Group will have an improved financial profile with
pro-forma 2016 revenues of US$181.9 million and pro-forma 2016
EBITDA of US$56.9 million
-- Directors and Proposed Directors believe that the Enlarged
Group will be in a better position to access additional capital
Highly experienced and qualified management and operating
team
-- Enlarged Group will have its corporate head office in London,
country head office in Buenos Aires and a regional office in
Mendoza
-- Enlarged Group will have approximately 118 employees of whom
112 will be based in Argentina. Directors and Proposed Directors
believe this represents one of the leading operating teams in
Argentina
-- Directors and Proposed Directors believe that the team has a
proven record of success with a track record of growing reserves,
production and cash flows - from 2013 to 2016, PETSA achieved a
strong production growth record (31 per cent. compound annual
growth rate on operated assets) in conventional production
Strong and growing production supporting potential for further
growth
-- Portfolio is diversified across hydrocarbon basins in Argentina
-- Lower risk and mature proved producing reserves, accounting
for 36 per cent. of 2P reserves on a net entitlement basis, provide
a stable production base and present an opportunity for further
conventional growth in addition to serving as a platform for
unconventional growth opportunities
-- Directors and Proposed Directors believe production from
Enlarged Group's gas reserves (28 per cent. of 2P reserves on a net
entitlement basis), may allow it to benefit from Argentina's
attractive pricing mechanisms
-- Directors and Proposed Directors expect many of the combined
assets to have lower operating costs following Completion
Significant exposure to the Vaca Muerta formation
-- In first quarter 2017, PETSA made a discovery in the Vaca
Muerta formation in the Puesto Rojas area - resource study
demonstrated potential of the Puesto Rojas licence, highlighting
that it contains more than 400 million boe (best estimate) of
recoverable resources
-- Combined position of over 1 million gross acres in various
concessions with Vaca Muerta potential with key Vaca Muerta assets
in the Puesto Rojas, Corralera, and Mata Mora areas
-- Vaca Muerta formation currently one of the few economically
producing shale oil formations outside of North America with
production of over 65,000 boepd
-- Vaca Muerta formation is a key global target for upstream
investment with approximately US$7 billion of investments confirmed
globally in 2017, expectations for US$12-15 billion of investments
in 2018 and expected investments in excess of US$20 billion
annually thereafter
An active work programme of development and exploration drilling
leading to potentially transformative platform
-- Work programme on conventional assets is expected to deliver
a doubling of net working interest production by the end of
2021
-- Enlarged Group intends to proactively explore, appraise and
make use of the world class potential of its unconventional
resource base in the Vaca Muerta formation - current drilling
programme in the Vaca Muerta formation includes drilling several
wells by the end of 2018
-- Work programme to be funded through existing debt facilities,
the new facilities under the Bridging and Working Capital
Facilities Agreement and cash flows from existing production and is
expected to cost US$165 million on a net working interest basis
until the end of 2018
Combination constitutes a reverse takeover under the AIM Rules
requiring the approval of Independent Shareholders at a General
Meeting - Independent Directors recommend that Independent
Shareholders vote in favour of the Resolutions
-- The Independent Directors and Nicolas Mallo Huergo recommend
that Independent Shareholders vote in favour of the Waiver
Resolution in respect of obligations under Rule 9 of the City
Code
-- The Independent Directors who own Ordinary Shares intend to
vote in favour of the each of the Resolutions to be proposed at the
General Meeting, in addition, Nicolas Mallo Huergo intends to vote
in favour of each of the Resolutions (other than the Waiver
Resolution). Following this announcement and the publication of the
Admission Document, it is expected that the suspension in the
trading of the Company's Ordinary Shares will be lifted today. The
current arrangements for the trading of the Ordinary Shares on the
Buenos Aires Stock Exchange will remain in place. An Admission
Document is being posted to shareholders, together with the Notice
of General Meeting, and will be available shortly on the Andes
Energia website, www.andesenergiaplc.com.ar. A General Meeting will
be held at the offices of CMS Cameron McKenna Nabarro Olswang LLP,
at Cannon Place, 78 Cannon Street, London EC4N 6AF at 10.00 a.m. on
9 August 2017. Application will be made for the Enlarged Share
Capital to be admitted to trading on AIM, conditional on
Completion. If Resolutions 1 to 3 are passed at the General
Meeting, it is expected Admission will become effective and
dealings in the Enlarged Share Capital will commence on AIM on 10
August 2017.
Nicolas Mallo Huergo, current Chairman of Andes Energia and
future non-executive Director of Phoenix Global Resources said:
"The Transaction is expected to generate operating synergies and
create a leading Argentinian independent exploration and production
company with significant exposure to the Vaca Muerta formation, a
world class resource play."
"I am delighted that Sir Michael Rake has agreed to succeed me
as Chairman of the new Board which is committed to the highest
standards of corporate governance."
Sir Michael Rake, proposed Chairman of Phoenix Global Resources
said:
"I see great potential in Argentina as the political climate
improves and becomes more pro-business. As a country, it is blessed
with world class shale resources. With the scale, assets, financial
resources and team the combination provides, I am confident the
Enlarged Group will benefit from these encouraging trends."
Anuj Sharma, CEO of Andes Energia said:
"I expect the combination to create a stronger independent
exploration and production company, and one of the most attractive
Vaca Muerta asset positions in Argentina. We have an active work
programme of development and exploration drilling which would not
only enable us to help deliver attractive growth, by developing the
Company's conventional reserve base, but also take forward our
substantial unconventional resources including our position in the
Vaca Muerta."
Daniel Jaeggi, President of Mercuria Energy said:
"Building upon our long-term view on investment in energy in the
Americas, we are pleased to announce this next step in our
cooperation with Andes Energia. We first invested in Andes in 2013,
and this brings our relationship to the next level. We look forward
to the enlarged group developing and expanding its business in
Argentina, notably its significant exposure to the world class Vaca
Muerta shale. Mercuria is expecting to remain a significant
long-term shareholder in Andes, and we have confidence in the Board
of directors and management of the Company, under the supervision
of Sir Michael Rake, to grow the Enlarged Group using the best
corporate governance practices."
For further information, please contact:
Andes Energia Anuj Sharma, T: +54 11 5530
plc CEO 9920
Philip Wolfe T: +44 (0)203
Billy Clegg, 757 4983
Head of Communications T: +44 (0)203
757 4983
Mercuria Energy Matthew Lauer T: +1-703-463-1841
Group
Stockdale Securities Antonio Bossi T: +44 20 7601
David Coaten 6100
Panmure Gordon Adam James T: +44 207 886
Atholl Tweedie 2500
Camarco Gordon Poole/James T: +44 20 3757
Crothers 4980
THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY, IS NOT INTED
TO AND DOES NOT CONSTITUTE OR FORM PART OF ANY OFFER OR INVITATION
TO PURCHASE OR SUBSCRIBE FOR, UNDERWRITE, SELL OR ISSUE OR THE
SOLICITATION OF AN OFFER TO PURCHASE OR SUBSCRIBE, SELL, ACQUIRE,
DISPOSE OF THE ORDINARY SHARES OR ANY OTHER SECURITY IN THE UNITED
STATES OF AMERICA, CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA,
JAPAN OR IN ANY JURISDICTION IN WHICH, OR TO ANY PERSONS TO WHOM,
SUCH OFFERING, SOLICITATION OR SALE WOULD BE UNLAWFUL.
THE SECURITIES DESCRIBED HEREIN MAY NOT BE OFFERED OR SOLD IN
THE UNITED STATES, UNLESS REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMED (THE "SECURITIES ACT"), OR PURSUANT
TO AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENT. NO PUBLIC
OFFERING OF THE SECURITIES DISCUSSED HEREIN IS BEING MADE IN THE
UNITED STATES, AND THE INFORMATION CONTAINED HEREIN DOES NOT
CONSTITUTE AN OFFERING OF SECURITIES FOR SALE IN THE UNITED STATES.
THE COMPANY DOES NOT CURRENTLY INT TO REGISTER ANY SECURITIES UNDER
THE SECURITIES ACT. THIS ANNOUNCEMENT IS NOT FOR RELEASE,
PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, IN OR INTO THE UNITED STATES.
THE CONTENT OF THIS ANNOUNCEMENT HAS NOT BEEN APPROVED BY AN
AUTHORISED PERSON WITHIN THE MEANING OF THE FINANCIAL SERVICES AND
MARKETS ACT 2000 (AS AMED) ("FSMA"). RELIANCE ON THIS ANNOUNCEMENT
FOR THE PURPOSE OF ENGAGING IN ANY INVESTMENT ACTIVITY MAY EXPOSE
AN INDIVIDUAL TO A SIGNIFICANT RISK OF LOSING ALL OF THE PROPERTY
OR OTHER ASSETS INVESTED.
Stockdale Securities Limited is authorised and regulated in the
United Kingdom by the Financial Conduct Authority ("FCA") and is
acting exclusively for the Company in connection with the
Transaction and Admission and no one else and will not be
responsible to anyone other than the Company for providing the
protections afforded to its clients nor for providing advice to any
other person in relation to the Transaction and Admission and/or
any other matter referred to in this Announcement.
Panmure Gordon (UK) Limited is authorised and regulated in the
United Kingdom by the FCA and is acting as joint broker to the
Company and will not be responsible to anyone other than the
Company for providing the protections afforded to its clients nor
for providing advice to any other person in relation to the
Transaction and Admission and/or any other matter referred to in
this Announcement.
No representation or warranty, express or implied, is or will be
made as to, or in relation to, and no responsibility or liability
is or will be accepted by Stockdale or Panmure Gordon or any of
their respective affiliates or any of their respective directors,
officers, employees, advisers or representatives (collectively,
"Representatives") as to or in relation to the accuracy or
completeness of this Announcement or any other written or oral
information made available to or publicly available to any
interested party or its advisers, and any liability therefor is
expressly disclaimed.
This Announcement contains certain forward-looking statements,
beliefs or opinions, with respect to certain of the Company's
current expectations and projections about future prospects,
developments, strategies, performance, anticipated events or trends
and other matters that are not historical facts. These
forward-looking statements, which sometimes use words such as
"aim", "anticipate", "believe", "intend", "plan" "estimate",
"expect" and words of similar meaning, include all matters that are
not historical facts and reflect the Directors' beliefs and
expectations and involve a number of risks, uncertainties and
assumptions that could cause actual results and performance to
differ materially from any expected future results or performance
expressed or implied by the forward-looking statement. Statements
contained in this Announcement regarding past trends or activities
should not be taken as a representation that such trends or
activities will continue in the future. The information contained
in this Announcement is subject to change without notice and,
except as required by applicable law, none of the Company,
Stockdale, Panmure Gordon nor any of their respective affiliates
nor any of their respective Representatives assumes any
responsibility or obligation to update, amend or revise publicly or
review any of the forward-looking statements contained in this
Announcement. You should not place undue reliance on
forward-looking statements, which speak only as of the date of this
Announcement. No statement in this Announcement is or is intended
to be a profit forecast or profit estimate or to imply that the
earnings of the Company for the current or future financial years
will necessarily match or exceed the historical or published
earnings of the Company. Past performance of the Company and PETSA
cannot be relied on as a guide to future performance and persons
reading this Announcement are cautioned not to place undue reliance
on such forward-looking statements.
The price of Ordinary Shares and any income from them may go
down as well as up and investors may not get back the full amount
invested on disposal of the Ordinary Shares.
Neither the content of the Company's website nor any website
accessible by hyperlinks on the Company's website is incorporated
in, or forms part of, this Announcement.
24 July 2017
LETTER FROM SIR MICHAEL RAKE, NON-EXECUTIVE DIRECTOR OF ANDES
ENERGIA PLC
(Registered in England and Wales under company number
5083946)
Registered office:
2nd Floor
Berkeley Square House
Berkeley Square
London W1J 6BD
Directors:
Nicolas Mallo Huergo (Executive Chairman)
German Ranftl (Chief Financial Officer)
Juan Carlos Esteban (VP E&P)
David Jackson (Non-Executive Director)
Nigel Duxbury (Non-Executive Director)
Carolina Landi (Non-Executive Director)
Javier Alvarez (Non-Executive Director)
Matthieu Milandri (Non-Executive Director)
Sir Michael Rake (Non-Executive Director)
Dear Andes Shareholders,
Proposed combination with Trefoil Holdings B.V., approval of a
waiver of the obligations under Rule 9 of the City Code, admission
of the Enlarged Share Capital to trading on AIM, proposed change of
the Company's name to Phoenix Global Resources plc, approval of the
Reduction of Capital and the Interoil Demerger by way of
distribution in specie, approval of amendments to the Articles,
approval of the Andes Energia Long Term Incentive Plan and Andes
Energia Deferred Bonus Plan and Notice of General Meeting
1. INTRODUCTION
Further to the announcements of the Company on 29 June 2017 and
30 June 2017, and the suspension of trading of the Ordinary Shares
on 29 June 2017, the Company announced today the conditional
combination with Trefoil Holdings to be effected through the
acquisition of the entire issued share capital of Trefoil Holdings
in consideration for the issue of the Consideration Shares, the
Deferred Consideration Shares, the Mercuria Warrants and the rights
to be issued the Settled Claim Shares to Upstream Capital, a
subsidiary of Mercuria EG. Following today's announcement and the
publication of the Admission Document, it is expected that the
suspension of trading in the Ordinary Shares will be lifted later
today.
The Consideration Shares to be issued to Upstream Capital will
represent 75.38 per cent. of the Enlarged Share Capital with
existing Andes Shareholders holding 24.62 per cent. Following
completion of the Transaction, the Mercuria Group will own
approximately 78 per cent. of the Enlarged Share Capital (including
the Mercuria Group's existing shareholding in Andes and the Share
Exchange Shares) and existing Andes Shareholders (excluding the
Mercuria Group) will own approximately 22 per cent. Details of the
Share Purchase Agreement are set out in paragraph 8 of this Part 1
and in paragraph 13.1(a) of Part 10 of the Admission Document.
Conditional on Admission, the name of the Company will be changed
to Phoenix Global Resources plc.
Trefoil Holdings owns, through a number of subsidiary companies,
over 99.99 per cent. of the interests in an Argentine company,
PETSA, which has exploration and production oil and gas assets in
the provinces of Mendoza, Santa Cruz and Tierra del Fuego in
Argentina. In 2016, PETSA's assets produced an average of 8,811
boepd net to its working interest from 19 concessions. The PETSA
Group has certified net working interest 2P reserves of 45.5
million boe as at 31 December 2016 and certified net working
interest 2C resources of 35.6 million boe as at 31 December 2016.
Further details of PETSA's oil and gas assets are set out in
paragraph 6 of Part 1 and in Parts 3 and 7 of the Admission
Document.
The Transaction constitutes a reverse takeover under Rule 14 of
the AIM Rules for Companies requiring the approval of Andes
Shareholders. It is therefore conditional upon, inter alia, the
passing of the Transaction Resolutions. The Transaction is also
conditional on the approval by the Independent Shareholders of a
waiver of Rule 9 of the City Code. Application will be made for the
Enlarged Share Capital to be admitted to trading on AIM,
conditional on Completion. The current arrangements for the trading
of the Ordinary Shares on the Buenos Aires Stock Exchange will
remain in place.
The purpose of the Admission Document is to set out the reasons
for the Transaction, and to explain why the Independent Directors
consider that the Proposals are in the best interests of the
Company and the Andes Shareholders and in respect of the Waiver why
the Independent Directors and Nicolas Mallo Huergo consider that it
is in the best interests of the Company and the Andes Shareholders.
the Admission Document also seeks the approval of Andes
Shareholders for the Proposals (or Independent Shareholder approval
in the case of the Waiver Resolution).
Nicolas Mallo Huergo has separately considered with the other
Independent Directors the Waiver elements of the Transaction.
Matthieu Milandri and Nicolas Mallo Huergo are not considered
Independent Directors for the purposes of the Transaction because
(i) Matthieu is an employee of Mercuria Energy Trading, which is a
subsidiary of Mercuria EG and (ii) Nicolas is a director of
Integra, which is the beneficiary of the fee payable under the
Transaction Fee Services Agreement.
Guillaume Vermersch, a Proposed Director, is not considered
independent for the purposes of the Transaction because he is an
employee of Mercuria Energy Trading.
You should read the whole of the Admission Document and your
attention in particular is drawn to the Risk Factors set out in
Part 6 of the Admission Document.
2. BACKGROUND TO AND REASONS FOR THE TRANSACTION
The Independent Board considers the Transaction to be important
to both Andes and PETSA, primarily because the combination of the
asset bases in Argentina is expected to create a stronger Enlarged
Group and the potential to develop conventional and unconventional
assets, particularly in Argentina. Subject to: (i) satisfying
eligibility criteria; (ii) obtaining any necessary approvals; and
(iii) market and trading conditions, the Company intends to make an
application to obtain a Premium Listing within 12 months of
Completion. The Directors and the Proposed Directors believe that
through a Premium Listing, the Enlarged Group would have better
access to additional capital from both debt providers and equity
investors.
In addition, the Transaction is expected to generate economic,
technical and operating synergies, which is expected to provide a
stronger platform for future growth for the Enlarged Group,
including access to PETSA's operating team which the Directors and
the Proposed Directors believe to be one of the leading independent
operating teams in Argentina.
Argentina is a prolific hydrocarbon region with a well
established exploration and production industry, an improving
business environment, and beneficial short term commodity pricing
which (over the longer term) the Board expects to trend towards
international commodity pricing. In particular, Argentina is a
leading unconventional hydrocarbon region with the second largest
recoverable shale gas resources and the fourth largest recoverable
shale oil resources in the world, much of which sits in the Vaca
Muerta formation.
The Directors and the Proposed Directors believe that the
Transaction will create one of the leading Argentinian independent
exploration and production companies with significant exposure to
the Vaca Muerta formation, a world class resource.
In particular, the Enlarged Group will have the following
strengths:
Scale to realise Argentine potential
The Enlarged Group will have over 10 million licenced gross
acres in Argentina (of which over 5 million are operated by the
Enlarged Group), 63 million boe net working interest 2P reserves
(assuming 26.01 per cent. of the net reserves attributable to
Interoil representing the Company's interest in that company) and
production of over 11,500 net working interest boepd on average in
2016 (assuming 26.01 per cent. of the net production attributable
to Interoil). The Enlarged Group will have a balanced portfolio of
existing production and near-term production growth potential from
identified development opportunities from its conventional asset
base as well as further growth potential from its unconventional
assets which are predominantly in the Vaca Muerta formation.
The table below sets out the Enlarged Group's pro forma working
interest acreage, reserves and resources as at the end of 2016 and
2016 average production by basin:
Basin Wi 1P 2P 3P 2C 3C 2Pr 3Pr WI
Acres* Reserves* Reserves* Reserves* Resources* Resources* Resources* Resources* Production**
Thousand Million Million Million Million Million Million Million BOE
Acres BOE BOE BOE BOE BOE BOE BOE Per
Day
Austral
Basin 529 16.2 21.5 23.1 0.0 0.0 0.0 0.0 4,073
Cuyo
Basin 101 8.5 8.8 9.0 0.0 0.0 0.0 0.0 2,557
Neuquen
Basin 794 16.9 31.4 43.8 77.7 206.7 565.2 1,379.8 4,615
Noroeste
Basin 4,590 0.0 0.0 0.0 0.0 0.0 50.2 208.2 0
San Jorge
Basin 332 0.0 0.0 0.0 0.0 0.0 0.0 0.0 8
Interoil*** 34 0.8 1.3 2.0 0.0 0.0 0.0 0.0 277
Total 6,379 42 63 78 78 207 615 1,588 11,530
* Net working interest as at 31 December 2016
** 2016 average net working interest
*** represents Andes' 26.01% ownership of Interoil
Financial resources to actively pursue the Vaca Muerta
opportunity
Following Completion, the Enlarged Group's work programme will
be funded through existing debt facilities and the new Bridging and
Working Capital Facilities Agreement. The Directors and the
Proposed Directors believe that the Enlarged Group will be in a
better position to access additional capital from both debt
providers and equity investors, recognising that this would be
further enhanced through a Premium Listing. Further access to
capital may be attractive to the Company for a number of reasons
including: (i) to satisfy free float requirements in connection
with or in preparation for any application for a Premium Listing;
(ii) to pursue an expanded development programme in relation to the
assets or other activities not included in the current business
plan; or (iii) to refinance existing debt (depending on the
Company's balance sheet at the relevant time). In addition, the
Directors and the Proposed Directors believe the Enlarged Group
will have an improved financial profile with pro-forma 2016
revenues of US$181.9 million and pro-forma 2016 EBITDA of US$56.9
million.
Highly experienced and qualified management and operating
team
The Directors and the Proposed Directors believe the Enlarged
Group will be one of the leading Argentinian independent
exploration and production companies with its corporate head office
in London, country head office in Buenos Aires and a regional
office in Mendoza. The Enlarged Group will have approximately 118
employees of whom 112 will be based in Argentina. The Directors and
the Proposed Directors believe that this represents one of the
leading operating teams in Argentina. The Directors and the
Proposed Directors believe that the team has an excellent
understanding of the local operating environment and business
culture including deep long-standing relationships with government,
supply chain and other stakeholders which have been developed over
many years. The Directors and the Proposed Directors believe that
the team has a proven record of success with a track record of
growing reserves, production and cash flows.
Strong, independent board
The Enlarged Group will have an experienced and highly qualified
Board with a track record of creating value. The Board will
comprise the Chief Executive Officer, Anuj Sharma, myself as
Chairman, the Chief Financial Officer, Philip Wolfe, and seven
further non-executive directors, of whom four will be
independent.
The Directors and the Proposed Directors are committed to the
highest standards of corporate governance and whilst the Company is
not and, upon Admission, will not be, subject to the Corporate
Governance Code applicable to companies listed on the Official
List, the Company intends to report against, and to substantially
comply with, its requirements. Whilst the Directors and the
Proposed Directors recognise that immediately following Completion
it will not be possible to adopt all the provisions of the
Corporate Governance Code, it is the Directors' and the Proposed
Directors' intention to adopt the remaining provisions in the short
term thereafter. The Directors and the Proposed Directors intend
also to take account of institutional shareholder and governance
rules and guidance on disclosure and shareholder authorisation.
3. KEY HIGHLIGHTS OF THE ENLARGED GROUP
Strong and growing production supporting potential for further
growth
The Enlarged Group's portfolio is diversified across hydrocarbon
basins in Argentina, which the Directors and the Proposed Directors
believe positions the Enlarged Group to take advantage of potential
future opportunities. The Enlarged Group's lower risk and mature
proved producing reserves, accounting for 36 per cent. of its 2P
reserves on a net entitlement basis, provide a stable production
base and present an opportunity for further conventional growth in
addition to serving as a platform for unconventional growth
opportunities. Furthermore, the Directors and the Proposed
Directors believe production from the Enlarged Group's gas reserves
(28 per cent. of its 2P reserves on a net entitlement basis), may
allow it to benefit from Argentina's attractive pricing
mechanisms.
Following Completion, the Directors and the Proposed Directors
expect many of the combined assets to have lower operating costs.
In addition, PETSA is a proven oil and gas operator in Argentina
with over 15 years of operating experience. From 2013 to 2016, it
achieved a strong production growth record (31 per cent. compound
annual growth rate on operated assets) in conventional production.
The Directors and the Proposed Directors believe that these
attributes provide considerable resilience to the Enlarged Group's
operations in a wide range of oil price environments and may allow
for greater cost savings through the Enlarged Group's potential to
take over operatorship of some of the non-operated assets in its
portfolio.
Significant exposure to the Vaca Muerta formation
Argentina is a leading shale region with the second largest
recoverable shale gas resources and the fourth largest recoverable
shale oil resources in the world, much of which is located in the
Vaca Muerta formation. The Vaca Muerta formation is currently one
of the few economically producing shale oil formations outside of
North America, with production of over 65,000 boepd and is a key
global target for upstream investment with approximately US$7
billion of investments confirmed in 2017, expectations for US$12-15
billion of investments in 2018 and expected investments in excess
of US$20 billion annually thereafter. Furthermore, as the entry
cost of accessing high quality unconventional shale resources in
the US has increased significantly, the Vaca Muerta formation
presents an attractive opportunity to invest in a world class
unconventional resources play.
In the first quarter of 2017, PETSA made a discovery whilst
drilling in shallow horizons in the Vaca Muerta formation as an
additional target on a conventional well in the Puesto Rojas area.
The discovery well was fracture stimulated successfully and
subsequently PETSA commissioned a resource study which demonstrated
the potential of the Puesto Rojas licence, highlighting that it
contains more than 400 million boe (best estimate) of recoverable
resources. The Directors and the Proposed Directors believe that
this discovery is the northernmost unconventional economic well in
the Vaca Muerta formation, so that there is also potential for
unconventional Vaca Muerta development on the acreage south of this
discovery area.
The Enlarged Group will have a combined position of over 1
million gross acres in the Vaca Muerta formation with key assets in
the Puesto Rojas and Cerro Mollar areas covering approximately
75,000 acres and Mata Mora covering approximately 55,352 acres. The
initial development plan for the area is intended to comprise a
pilot project utilising vertical drilling into the Vaca Muerta
formation. However, a full-field development plan would most likely
comprise horizontal drilling in the area. At present, PETSA is in
the process of exploring, appraising and delineating unconventional
Vaca Muerta resources for determining optimal development on its
acreage.
Further analysis of the Puesto Rojas licence was carried out by
PETSA using the results of the 3D seismic and modern petrophysical
data employed in a resource study, as well as public information on
wells drilled in the areas surrounding the block. Based on expected
development within the volatile and black oil windows, the
Directors and the Proposed Directors believe horizontal wells could
provide three times to five times more initial production over
vertical wells, based on PETSA's management's and its advisers'
observation of numerous historical data points for Vaca Muerta
wells in the Neuquén basin. A similar analysis was also carried out
on the Mata Mora block using only public information from wells in
areas surrounding the block, which suggests that Mata Mora's
initial production rates are stronger than those from the average
Vaca Muerta well. This presents further opportunities for the
Enlarged Group to develop its unconventional operations and
expertise in order to better make use of its significant resource
potential.
An active work programme of development and exploration drilling
leading to potentially transformative platform
The Enlarged Group will have a large and high quality inventory
of conventional prospects, infill targets and workover projects,
and is expected to pursue an active programme in developing these
assets which is expected to focus on the Chachahuen Sur concession,
the Santa Cruz Sur area, the Tupungato area and the Puesto Rojas
and Cerro Mollar concessions. In aggregate, the work programme on
the conventional assets is expected to deliver a doubling of net
working interest production by the end of 2021.
In addition to this, the Enlarged Group intends to proactively
explore, appraise and make use of the world class potential of its
unconventional resource base in the Vaca Muerta formation. The
Directors and the Proposed Directors believe that, by utilising its
current financial resources and cash flows from operations, the
Enlarged Group can continue its exploration and appraisal work in
the Vaca Muerta acreage and expand and develop its unconventional
resource base. Although conditional upon the success of this
appraisal work, the Enlarged Group's current drilling programme in
the Vaca Muerta formation includes drilling several wells by the
end of 2018. This work programme is expected to build on PETSA's
recent success in the Puesto Rojas block and provide exposure to
the potentially transformational growth prospects from the Vaca
Muerta formation.
The Enlarged Group's work programme is to be funded through
existing debt facilities, the new Bridging and Working Capital
Facilities Agreement and cash flows from existing production and is
expected to cost US$165 million on a net working interest basis
until the end of 2018. The Directors and the Proposed Directors
believe that one of the strengths of the Enlarged Group is that it
will be able to respond promptly to drilling results providing the
ability to amend its programme to adapt to changing circumstances.
Further successful appraisal and drilling on the unconventional
acreage or exploration projects may lead the Enlarged Group to
increase drilling in these areas or otherwise modify the drilling
order and work programme to optimise it on a risk adjusted return
basis. Similarly, any increased availability of capital (in the
form of debt or equity) would enable the Enlarged Group to
accelerate the development and exploration of its reserve and
resource base.
4. INFORMATION ON THE COMPANY
The Company is an oil and gas exploration, development and
production company whose Ordinary Shares are admitted to trading on
AIM and are also traded on the Buenos Aires Stock Exchange. The
Company is headquartered in London with regional offices in Buenos
Aires and Mendoza, Argentina.
The Company currently has 19 licences (in addition to 11
licences which are in the process of being or are already
relinquished) in Argentina and 11 licences in Colombia. In 2016,
the Company produced an average of 3,507 boepd on a working
interest basis (including 100 per cent. of the net production
attributable to Interoil in which the Company owns a 26.01 per
cent. interest but was, in 2016, indirectly controlled by the
Company) out of which an average of 2,442 boepd were produced in
Argentina from six licences mainly from the Chachahuen area,
located in the Mendoza Province. The balance of 1,064 boepd of
average production is represented by 100 per cent. Of the working
interest production attributable to Interoil. Approximately 14 per
cent. of the Company's total production was gas(1) (including 100
per cent. of the net production attributable to Interoil in which
the Company owns a 26.01 per cent. interest, but was in 2016,
indirectly controlled by the Company), with the balance being oil.
As explained in paragraph 21 of Part 1 of the Admission Document,
the Company proposes to transfer 513,598 Interoil Shares to the US
Andes Shareholders and to demerge the remaining Interoil Shares to
Andes Shareholders (other than US Andes Shareholders and any Other
US Andes Shareholders) by way of a distribution in specie pursuant
to which such Andes Shareholders will receive Exchangeable
GuernseyCo Shares. This is in line with the Enlarged Group's
strategy to focus on assets in Argentina only.
As at 31 December 2016, the Company's 2P reserves were estimated
at 21.1 million boe on a working interest basis (including 100 per
cent. of the net reserves attributable to Interoil in which the
Company owns a 26.01 per cent. interest, but was in 2016,
indirectly controlled by the Company) and approximately 18.0
million boe on a net entitlement basis, of which net entitlement 2P
reserves in Argentina were approximately 13.5 million boe. At the
same date, best estimate prospective and contingent resources on a
net entitlement basis were approximately 229 million, all of which
were in Argentina and comprise development and exploration
opportunities.
The Company's licences cover over 8 million gross acres across
South America of which almost 250,000 working interest acres are in
the Vaca Muerta formation, which is the second largest shale oil
deposit in the world and one of the few economically producing
shale formations outside North America. Overall more than 900 wells
have already been drilled and fracked in the Vaca Muerta
formation.
The Company's principal oil and gas assets are summarised
below:
4.1 Argentina
The Company indirectly holds a 20 per cent. non-operating
working interest in the Chachahuen field in the Neuquén basin that
is being actively developed by its partner, YPF. In the Neuquén
basin, the Company also indirectly holds 27 per cent. interests in
two blocks which are believed to be highly prospective for the Vaca
Muerta formation: the Corralera and Mata Mora blocks, both
previously operated by YPF. The Company is in negotiations with the
provincial authorities to approve the transfer to the Company of
YPF's operating interests in and the subdivision of these blocks so
that the Company will indirectly own increased interests and
operate the blocks with a third party owning and operating the
southern parts of these blocks. The Company also holds interests in
four other blocks which are prospective for the Vaca Muerta
formation: a 100 per cent. working interest in the Vega Grande and
La Brea block, a 20 per cent. working interest in the Malargue
block and a 40 per cent. Working interest in the El Manzano block
in all formations other than Agrio in which it has 100 per cent.
working interest. The Company also holds 100 per cent. working
interests in the development and reactivation activities of the La
Paloma, Cerro Alquitrán, Mina Baku, Los Buitres, Laguna El Loro,
Güemes, Valles Calchaquies and Cobres concessions and 30 per cent.
non-operated working interests in the San Bernardo and Confluencia
concessions. The Company also holds 49.9 per cent. non-operated
working interests in the Chañares Herrados and Puesto Pozo Cercado
licences, where PETSA also holds an interest.
4.2 Colombia
The Company owns a 70 per cent. non-operated working interest in
the LLA2, LLA28, LLA49, LLA79 (suspended), YDLLA5, (request made to
relinquish licence), YDLLA2 (request made to relinquish licence),
YDLLA8 (request made to relinquish licence), LLA12, LLA51, LLA3 and
VMM8 (request made to relinquish licence) exploration and
production concessions in Colombia. Additionally, the Company owns
26.01 per cent. of the issued share capital of Interoil which is an
Oslo quoted company with interests in the following assets in
Colombia: (i) a 90 per cent. working interest in the Altair
concession, holding exploration potential: (ii) a 100 per cent.
working interest in the LLA47 concession, holding exploration
potential; (iii) a 70 per cent. working interest in the Mana and
Rio Opia production sharing agreement; and (iv) a 63 per cent.
working interest in the Ambrosia production sharing agreement.
As explained in paragraph 21 of Part 1 of the Admission
Document, the Company proposes to transfer 513,598 Interoil Shares
to the US Andes Shareholders and to demerge the remaining Interoil
Shares to Andes Shareholders (other than the US Andes Shareholders
and any Other US Andes Shareholders) by way of a distribution in
specie pursuant to which such Andes Shareholders will receive
Exchangeable Guernsey Co Shares. This is in line with the Enlarged
Group's strategy to focus on assets in Argentina only.
Under the Share Purchase Agreement the Company has given certain
undertakings to Upstream Capital to use reasonable endeavours to
dispose of its Colombian assets following Admission.
Further information on Andes is set out in Part 2 of the
Admission Document.
5. ANDES' CURRENT TRADING AND PROSPECTS
On 30 March 2017, Andes announced two new credit facilities
totalling US$60 million with Mercuria Energy Trading to finance
drilling activities in Chachahuen and Vaca Muerta and for other
working capital purposes. As a consequence of the drawdown of US$20
million from these facilities and associated drilling costs, Andes'
debt levels have increased significantly since 31 December
2016.
On 18 May 2017, Andes announced that it was unwinding its joint
arrangement with Canacol Energy Ltd through which it controlled
Interoil. As a consequence, and following changes to the
composition of the board and senior management of Interoil, Andes
ceased to exert control over Interoil and therefore no longer
consolidates Interoil in its accounts with effect from 8 June 2017.
Going forward, Andes will account for its 26.01 per cent. interest
in Interoil using the equity method of accounting up to the date on
which the proposed Interoil Demerger is effective. The Unaudited
Proforma Financial Information in Part 8C of the Admission Document
provides an illustration of the financial impact of the
de-consolidation and the Interoil Demerger on Andes' historical
financial statements for the year ended 31 December 2016.
On 26 May 2017, Andes announced results for the year ended 31
December 2016 which included the following outlook statement:
"Operationally, 2017 has started well, with Group production in
March 2017 currently at 2,518 bpd in Argentina and 984 boepd in
Colombia; a total of 3,502 boepd.
Andes, with its partner YPF, the state Argentine oil company,
has 86 new wells planned in 2017, 5 appraisal wells, 55 production
wells and 26 injector wells. Additionally, 19 reconversions are
expected to be performed. Out of the 86 planned wells, 30 wells
have been drilled since the beginning of 2017. The wells will be
funded primarily by field production cash flow and available credit
facilities.
For Andes' licences in Colombia, an aggressive exploration
campaign of geochemical surveys are being conducted as part of the
committed investment activities with the Agencia Nacional de
Hidrocarburos. In Interoil, a drilling campaign of 1 exploration
well on the Altair licence and between 2 and 4 exploration wells on
the LLA-47 licence is currently ongoing."
As mentioned in paragraph 4.1 above, Andes is in the process of
converting its non-operating interest to operating interests in
negotiations with the Neuquén province which may also entail a
potential increase in Andes' acreage in this area.
6. INFORMATION ON TREFOIL HOLDINGS AND PETSA
Trefoil Holdings, a wholly-owned subsidiary of Upstream Capital,
is the holding company of the PETSA Group. Trefoil Holdings
indirectly owns over 99.99 per cent. of the issued share capital of
PETSA, through its subsidiaries, Trefoil Limited, Trefoil GmbH,
Trefoil Switzerland S.A., San Enrique Petrolera B.V. and Upstream
Latino America S.L.
PETSA is an oil and gas exploration, development and production
company with high quality assets in leading plays in Argentina.
PETSA is headquartered in Buenos Aires, Argentina, with a regional
office in Mendoza, Argentina. PETSA holds participating interests
in 19 concessions in four basins in Argentina covering almost 1.9
million gross acres and more than 800,000 working interest acres.
Of the four basins where PETSA holds participating interests, two
basins, Cuyo and Neuquén, are in the centre and northern part of
the country while two basins, San Jorge Gulf and Austral, are in
the south of the country. In 2016, PETSA's average production was
8,811 boepd on a working interest basis and 7,378 boepd on a net
entitlement basis. PETSA is focused on liquid hydrocarbons, with 63
per cent. of PETSA's working interest production consisting of oil
on a boe basis with the balance being gas(2) .
PETSA's principal oil and gas assets are summarised below:
6.1 Neuquén basin: PETSA has a 100 per cent. operated working
interest in three concessions in the Neuquén basin, a 37.5 per
cent. non-operated working interest in one production concession, a
33.33 per cent. non-operated working interest in one exploration
concession and a 15 per cent. non-operated working interest in one
other exploration concession. The operated concessions with 100 per
cent. working interest are Puesto Rojas, Cerro Mollar Norte, and
Cerro Mollar Oeste. Among the non-operated concessions, Cajon de
los Caballos, in which PETSA has a 37.5 per cent. working interest,
is primarily a production asset, while Cajon Oriental, in which
PETSA has a 15 per cent. working interest, and Rio Atuel, in which
PETSA has a 33.3 per cent. working interest, are primarily
exploration assets. In 2016, these assets in the Neuquén basin
produced at an average rate of 2,895 boepd on a working interest
basis and 2,440 boepd on a net entitlement basis. As at 31 December
2016, these assets had working interest remaining 2P reserves of
17.6 million boe and net entitlement remaining 2P reserves of 14.8
million boe based on the PETSA Reserves CPR included in Part 7 of
the Admission Document.
6.2 Cuyo basin: PETSA has a 100 per cent. operated working
interest in two concessions in the Cuyo basin and a 28.08 per cent.
non-operated working interest in two other concessions. The
operated concessions are Tupungato and Atamisqui, while the
non-operated concessions are Chañares Herrados and Puesto Pozo
Cercado. In 2016, these assets produced at an average rate of 1,835
boepd on a working interest basis and 1,502 boepd on a net
entitlement basis. As at 31 December 2016, these assets had working
interest remaining 2P reserves of 6.4 million boe and net
entitlement remaining 2P reserves of 5.2 million boe as per the
PETSA Reserves CPR.
6.3 Austral basin: PETSA has a 70 per cent. working interest in
five concessions in the Austral basin. While PETSA's interest is a
non-operated working interest at present, PETSA has the right to
take over the operatorship after satisfying certain requirements
under the joint venture agreement with the operator of these
concessions. One of the main requirements under the joint venture
agreement is to provide the current operator, Roch, with 60 days'
notice for the change of operatorship. The five concessions include
Chorrillos, Moy Aike, Campo Bremen, Oceano and Palermo Aike. In
2016, these assets produced at an average rate of 3,314 boepd on a
working interest basis and 2,792 boepd on a net entitlement basis.
As per the PETSA Reserves CPR included in Part 7 of the Admission
Document, these assets had working interest remaining 2P reserves
of 19.6 million boe and net entitlement remaining 2P reserves of
16.2 million boe as at 31 December 2016. PETSA also has 12.615 per
cent. Nonoperated working interests in the Las Violetas, Angostura,
and Rio Cullen concessions. In 2016, these assets produced at an
average rate of 759 boepd on a working interest basis and at 638
boepd on a net entitlement basis. As per the PETSA Reserves CPR
included in Part 7 of the Admission Document, these assets had
working interest remaining 2P reserves of 1.9 million boe and net
entitlement remaining 2P reserves of 1.6 million boe as at 31
December 2016.
6.4 San Jorge basin: PETSA has a 24.9175 per cent. non-operated
working interest in one concession in the San Jorge basin, the Sur
Rio Deseado Este concession, which is operated by Roch. In 2016,
this asset produced at an average rate of 8 boepd on a net working
interest basis and 7 boepd on a net entitlement basis. No reserves
are presently assigned to this asset.
According to the PETSA Reserves CPR, as at 31 December 2016,
PETSA has 2P reserves of 45.5 million boe on a working interest
basis and 37.9 million boe on a net entitlement basis. 63 per cent.
of these reserves consists of oil with the balance being gas.
In the first quarter of 2017, PETSA made a significant discovery
of unconventional shale oil in the Vaca Muerta formation.
Subsequent to this discovery, PETSA engaged W.D. Von Gonten, a
world renowned unconventional shale expert, for further appraisal
of the Vaca Muerta potential on its Puesto Rojas, Cerro Mollar,
Cerro Mollar Oeste and Cerro Mollar Norte concessions where PETSA
has 100 per cent. working interests. The PETSA Resources CPR
produced by W.D. Von Gonten, which is included in Section B of Part
7 of the Admission Document, appraised up to 1 billion working
interest boe of recoverable Vaca Muerta resources, of which 93
million working interest boe were appraised as 3C contingent
resources on part of the block.
Further information on PETSA is set out in Part 3 of the
Admission Document.
7. PETSA'S CURRENT TRADING AND PROSPECTS
In 2017 to date, PETSA's production volumes, revenues and
profits have been lower than seen in the comparable period in 2016.
Oil sales volumes are approximately 11 per cent. lower as a result
of reduced drilling levels on production acreage as capital
expenditure for new wells is re directed to the Vaca Muerta
appraisal programme. Production drilling is expected to continue in
the second half of 2017 and the associated benefits in terms of
increased production and sale volumes are expected to be realised
in the latter part of 2017. As a result the phasing of production
and revenues in 2017 will be significantly different to the phasing
in 2016. PETSA plans to further invest in appraisal and development
activity of the Vaca Muerta formation in 2017 and into 2018.
Achieved average oil prices in 2017 to date are approximately
US$50/bbl compared with US$58/bbl in the same period in 2016. This,
combined with the lower production and sales volumes, resulted in a
reduction in overall oil revenues of approximately 23 per cent.
When compared to the equivalent period in 2016. Gas sales volume
and prices have increased when compared to last year, with gas
revenues increasing by 40 per cent. However, gas production and
sales represent a comparatively small income stream when compared
to oil. Operating costs are also slightly increased resulting in
overall profits in 2017 to date that are significantly lower than
for the same period last year. However, PETSA's management team
believes that the benefits of the drilling in the Vaca Muerta area
may result in a significant increase in production in the second
half of 2017.
8. PRINCIPAL TERMS OF THE TRANSACTION
The Company has entered into the Share Purchase Agreement,
pursuant to which it has conditionally agreed to acquire the entire
issued share capital of Trefoil Holdings in exchange for the issue
of the Consideration Shares, the Deferred Consideration Shares (if
applicable) and the Mercuria Warrants, and the granting of the
rights in relation to the issue of the Settled Claim Shares, by the
Company to Upstream Capital. In addition, on Completion the Company
will issue the Share Exchange Shares to Mercuria EAM in accordance
with the Share Exchange Agreement and the Share Exchange
Termination Agreement.
The Consideration Shares to be issued to Upstream Capital will
represent 75.38 per cent. of the Enlarged Share Capital. Following
completion of the Transaction, the Mercuria Group will own
approximately 78 per cent. of the Enlarged Share Capital (including
the Mercuria Group's existing shareholding in Andes and the Share
Exchange Shares) and existing Andes Shareholders (excluding the
Mercuria Group) will own approximately 22 per cent.
Completion of the Transaction is subject to certain conditions
being satisfied, including the passing of the Transaction
Resolutions by Andes Shareholders and the Waiver Resolution by the
Independent Shareholders at the General Meeting and Admission.
As part of the terms of the Transaction, the Company has agreed
to issue the Mercuria Warrants to Upstream Capital to enable the
Mercuria Group to maintain its percentage holding in the Company in
the event that any new Ordinary Shares are issued following the
exercise of any of the Existing Warrants (excluding the Mercuria
Existing Warrants), calculated assuming that any of the 8,463,325
Mercuria Existing Warrants which remain unexercised had been
exercised and subject to a maximum deemed holding of 78 per cent.
for the purpose of calculating Upstream Capital's proportionate
entitlement.
Under the terms of the Share Purchase Agreement, Upstream
Capital is also entitled to receive (without further payment) such
number of Deferred Consideration Shares that would enable Upstream
Capital to maintain a percentage holding in the Company equal to
the percentage of the Enlarged Share Capital represented by the
Consideration Shares (i.e. 75.38 per cent.) in the event that
Integra receives the Integra Shares in accordance with the terms of
the Transaction Fee Services Agreement (see paragraph 13.1(i) of
Part 10 of the Admission Document).
Under the terms of the Share Purchase Agreement, in the event of
a Settled Claim in excess of US$5 million, Upstream Capital has the
right to elect to receive new Ordinary Shares instead of cash (or a
combination of both). If the Settled Claim has been announced by
the Company to the market, the issue price for such Ordinary Shares
is calculated as the average Closing Price for the five Business
Days preceding the date the Settled Claim is to be settled, failing
which it is the five Business Days from the date of the
announcement of the Settled Claim, in each case subject to a
minimum price of 10 pence, being the nominal value of the Ordinary
Shares.
In the event of a Settled Claim, Upstream Capital has agreed to
consult with the Company prior to electing to receive new Ordinary
Shares and act in good faith towards the Company to achieve a
mutually acceptable solution in the event of a Settled Claim.
Upstream Capital has further undertaken not to elect to receive new
Ordinary Shares if it would cause the Company to breach any
provision of the AIM Rules or the Listing Rules (if
applicable).
Further details of the Share Purchase Agreement, the Share
Exchange Agreement, the Share Exchange Termination Agreement and
the Mercuria Warrants are set out in paragraph 13.1 of Part 10 of
the Admission Document.
9. SUMMARY FINANCIAL INFORMATION ON THE ANDES GROUP AND THE TREFOIL HOLDINGS B.V. GROUP
9.1 Selected financial information of the Andes Group
The following tables set forth, for the periods indicated,
selected consolidated historical financial information of the Andes
Group derived from the historical financial information
incorporated by reference in Part 8A of the Admission Document.
This information should be read in conjunction with the historical
financial information set out in Part 8A of the Admission
Document.
For the years ended 31 December
2016 2015 2014
US$000 US$000 US$000
Revenue 67,768 66,815 48,229
Gross profit 16,823 21,110 17,599
Operating (loss)/profit
before interest and
tax (7,500) 2,837 1,707
Loss after tax (26,276) (18,385) (10,919)
Net assets 44,660 83,208 128,558
Borrowings 105,997 99,001 57,663
EBITDA 14,567 16,746 8,755
For the years ended 31 December
2016 2015 2014
US$000 US$000 US$000
Operational data:
Oil:
Revenues 60,697 61,545 45,296
Oil bbls sold 1,127,320 960,390 620,500
Effective price US$/bbl 53.84 64.08 73
Gas:
Revenues 3,019 2,814 N/A
Gas Mm3 sold 25,440 25,651 N/A
Effective price US$/mmbtu 3.21 2.97 N/A
Other revenues:
Revenue 4,052 2,456 2,933
Total:
Revenues 67,768 66,815 48,229
Boe sold 1,287,320 1,121,719 620,500
Effective price US$/Boe 49.50 57.38 73.00
Boe per day 3,450 3,209 1,700
Opex per Boe 21.60 20.08 31.71
--------------------------- ------------ ----------- ---------
An operating and financial review for the historical financial
information of the Andes Group is set out in the 2016 Annual
Report, 2015 Annual Report and 2014 Annual Report.
9.2 Selected financial information of the Trefoil Holdings B.V. Group
The following tables set forth, for the periods indicated,
selected combined historical financial information of the Trefoil
Holdings B.V. Group derived from the historical financial
information included in Part 8B of the Admission Document. This
information should be read in conjunction with the historical
financial information set out in Part 8B of the Admission
Document.
For the years ended 31 December
2016 2015 2014
US$000 US$000 US$000
Revenue 129,264 120,502 104,238
Gross profit 33,744 21,063 21,173
Operating profit before
interest and tax 19,671 10,437 6,674
Profit after tax 4,016 (8,645) (10,796)
Net assets 155,829 152,091 154,411
Borrowings 13,320 37,850 32,113
EBITDA 46,550 31,269 22,134
Operational data:
Oil:
Revenues 110,362 106,529 89,014
Oil bbls sold 1,975,000 1,636,000 1,240,000
Effective price US$/bbl 56.0 65.1 71.8
Gas:
Revenues 18,902 13,973 15,224
Gas Mm3 sold 163,797 163,638 182,436
Effective price US$/mmbtu 3.08 2.31 2.26
Total:
Revenues 129,264 120,502 104,238
Boe sold 2,939,000 2,599,000 2,314,000
Effective price US$/Boe 44.0 46.3 45.0
Boe per day 8,052 7,121 6,339
Opex per Boe 20.9 22.2 15.4
--------------------------- ---------- ---------- ----------
9.3 Operating and financial review of the Trefoil Holdings B.V. Group
PETSA's revenues increased by 16 per cent. in 2015 and by 7 per
cent. in 2016 to US$129 million, with oil revenues accounting for
85 per cent., 88 per cent. and 85 per cent. of total revenues in
2014, 2015 and 2016 respectively and gas revenues accounting for
the remainder. The 16 per cent. increase in revenue in 2015 as
compared to 2014 was driven by oil sales where a 32 per cent.
increase in the volume sold was offset by a 9 per cent. decrease in
the average oil price achieved.
The increase in oil production was predominantly due to the
three new wells which PETSA brought into operation in the Puesto
Rojas area in August, November and December 2015. The 4 per cent.
increase in oil revenues in 2016 was again driven by further new
wells in Puesto Rojas with volumes sold from this area increasing
by 78 per cent. due to a full year of production. In 2016, the
average oil price achieved declined by 14 per cent. from US$65 per
barrel to US$56 per barrel as a result of the Argentinian
government seeking to bring local prices in line with international
crude oil prices.
Gas revenues declined by 8 per cent. in 2015 due to lower
volumes but increased by 35 per cent. in 2016 as, in April 2016,
the government fixed gas prices above 2015 levels. PETSA completed
two workovers in the main producing area of Santa Cruz Sur to
stabilise decreasing production volumes due to the natural
production curve.
In 2016, excluding interest, tax, depreciation, amortisation and
royalties the majority of PETSA's cost structure consists of fixed
expenses. In total approximately 66 per cent. of PETSA's costs are
fixed operating expenses. Variable operating expenses, such as
trucking and treatment, are approximately 13 per cent. of total
costs excluding previously mentioned items. Administrative expense
is approximately 12 per cent. of total costs excluding the
previously mentioned items. Sales taxes represent a further 6 per
cent. of total expenses. The remaining approximately 6 per cent.
consists of various minor items such as exploration expenses.
Increased contractor and trucking costs as a result of new
operations in Puesto Rojas and the Santa Cruz Sur operational
structure led to an increase in operating costs of US$5.7 million
in 2015 whilst a decrease in salaries, contractor, land lease and
pulling costs led to an US$8.5 million decrease in 2016, or a
US$5.2 decrease per barrel.
Administrative expenses decreased across the period from US$9.1
million in 2014 and in 2015 to US$8.1 million in 2016 largely as a
result of the decline in the value of the Argentine Peso as
compared to the US dollar. Finance costs increased by US$5.5
million in 2015 as a result of an increase in loans in GLACCO due
to increased capital expenditure and a reduction in revenue.
Throughout the historical financial period, PETSA held loans in
both Argentine Pesos and US dollars, the majority of which were
held with local banks. The increase in total borrowings of US$5.7
million to US$37.9 million in 2015 was a result of taking on 11 new
loans which were used to fund the drilling campaigns undertaken by
PETSA. PETSA also used some of the borrowing proceeds to pay GLACCO
suppliers as production costs exceeded revenues in the year. The
decrease of US$24.5 million in total borrowings in 2016 was due to
the repayment of GLACCO's loans and a partial repayment of PETSA's
loans.
In 2016, PETSA used its cash reserves, including US$18 million
it received from the repayment of a loan note issued by Mercuria
EAM and held by PETSA, to repay a significant portion of both the
non-current and current borrowings it had previously taken out.
PETSA's 2P oil reserves increased by 64 per cent. in 2015 and
increased by 3 per cent. in 2016. These changes were predominantly
as a result of PETSA's plans for future drilling campaigns in the
Puesto Rojas area. There was a 45 per cent. increase in the proved
oil reserves in 2015 due to the results achieved in the Puesto
Rojas area. In 2016, of the total proved oil reserves held by
PETSA, 52 per cent. were in the Puesto Rojas concession, making it
the largest asset of PETSA by reserves and production.
Probable gas reserves decreased in both 2015 and 2016 as a
result of changes in PETSA's expectation of the drilling campaigns
in the Santa Cruz Sur area. The 20 per cent. decrease in the proved
gas reserves in 2015 was due to the delays associated with the
drilling programme in the Santa Cruz Sur area. During 2016, gas
reserves decreased 5 per cent. in line with the natural production
curve as PETSA did not undertake any significant workovers to
arrest the decline in the main producing areas.
10. IMPLICATIONS OF THE PROPOSALS UNDER THE CITY CODE
At the date of the Admission Document, Upstream Capital holds
100 per cent. of the issued share capital of Trefoil Holdings and
Mercuria EAM holds 49,421,639 Existing Ordinary Shares representing
8.16 per cent. of the Existing Share Capital. In addition, the
Mercuria Group also has rights to subscribe for up to 8,463,325
Ordinary Shares pursuant to the Mercuria Existing Warrants and
14,766,666 Ordinary Shares pursuant to the Share Exchange Agreement
and up to 39,704,926 Ordinary Shares (including accrued interest to
31 July 2017) pursuant to the Convertible Loan Agreement as set out
below and paragraph 2 of Part 9 of the Admission Document. The
Company has undertaken to repay the Convertible Loan Agreement
within three Business Days of receipt of the funds under the
Bridging and Working Capital Facilities Agreement.
Upstream Capital and Mercuria EAM are each indirectly 100 per
cent. owned by Mercuria EG, a Cyprus incorporated company which
controls the Mercuria energy trading business with 50 offices
worldwide, headquartered in Switzerland and with over 1,000
employees. In turn approximately 79.8 per cent. of the share
capital of Mercuria EG, but 100 per cent. of its voting rights, is
owned by Mercuria EGH, a BVI incorporated company, with the balance
of approximately 20.2 per cent. of the shares in Mercuria EG with
no voting rights held by the participants in the Mercuria ESOP.
Mercuria EGH is controlled by the principal partners and
founders, together with their holding companies and family trusts,
of Mercuria EG. Mercuria EG was co-founded in 2004 by Messrs. Marco
Dunand, Daniel Jaeggi, Wiaczeslaw Slawomir Smolokowski, Grzegorz
Jankilevitsch and Vadim Linetskiy.
The Mercuria Group and the shareholders of Mercuria EGH are
deemed to be acting in concert with Upstream Capital in respect of
the Transaction for the purposes of the City Code. All of them are
referred in the Admission Document together as the "Concert Party".
The members of the Concert Party and their interests in Mercuria
EGH are set out in Part 9 of the Admission Document.
The City Code and waiver of Rule 9 of the City Code
Introduction
The Company is incorporated in England and Wales and application
will be made, conditional on Completion, for the Enlarged Share
Capital to be admitted to trading on AIM. The City Code applies to
all companies who have their registered office in the UK, Channel
Islands or Isle of Man and whose securities are traded on a
regulated market in the UK or a stock exchange in the Channel
Islands or Isle of Man or a multilateral trading facility.
Accordingly, the City Code applies to the Company.
Under Rule 9 of the City Code, any person who acquires an
interest in shares (as defined in the City Code), whether by a
series of transactions over a period of time or not, which (taken
together with any interest in shares held or acquired by persons
acting in concert with him) in aggregate, carry 30 per cent. or
more of the voting rights of a company which is subject to the City
Code, is normally required by the Takeover Panel to make a general
offer to all of the remaining shareholders to acquire their
shares.
Similarly, when any person together with persons acting in
concert with him is interested in shares which, in the aggregate,
carry not less than 30 per cent. of the voting rights of such a
company but does not hold shares carrying more than 50 per cent. of
such voting rights, a general offer will normally be required if
any further interests in shares are acquired by any such person
which increases the percentage of shares carrying voting rights in
which he is interested.
An offer under Rule 9 must be in cash or accompanied by a cash
alternative and at the highest price paid during the preceding 12
months for any interest in shares of the Company by the person
required to make the offer or any person acting in concert with
him.
Under the City Code, a concert party arises where persons who,
pursuant to an agreement or understanding (whether formal or
informal), co-operate to obtain or consolidate control (as defined
below) of a company or to frustrate the successful outcome of an
offer for a company. Control means holding, or aggregate holdings,
of shares carrying 30 per cent. or more of the voting rights of the
company, irrespective of whether the holding or holdings give de
facto control.
For the purposes of the City Code, all of the members of the
Concert Party are deemed to be acting in concert and their
interests are to be aggregated. Further information about the
Concert Party is set out in Part 9 and paragraph 5 of Part 10 of
the Admission Document.
Maximum controlling position of the Concert Party
As at the date of the Admission Document, the members of the
Concert Party are interested in 49,421,639 Existing Ordinary
Shares, representing approximately 8.16 per cent. of the Existing
Share Capital.
Immediately following Admission and the issue of the
Consideration Shares and the Share Exchange Shares, the Concert
Party will hold, in aggregate, 1,963,294,690 Ordinary Shares,
representing approximately 78 per cent. of the Enlarged Share
Capital (assuming no exercise of Existing Warrants between the date
of the Admission Document and Admission) which, without a waiver of
the obligations under Rule 9 of the City Code, would oblige the
Concert Party to make a general offer to Andes Shareholders under
Rule 9 of the City Code.
Under the terms of the Share Purchase Agreement, in the event of
a Settled Claim in excess of US$5 million, Upstream Capital has the
right to elect to receive new Ordinary Shares instead of cash or a
combination of both. If the Settled Claim has been announced by the
Company to the market, the issue price for such Ordinary Shares is
calculated as the average Closing Price for the five Business Days
preceding the date the Settled Claim is to be settled, failing
which it is the five Business days from the date the Settled Claim
is announced, in each case subject to a minimum price of 10 pence,
being the nominal value of the Ordinary Shares. The Company's
maximum liability under the Share Purchase Agreement for a breach
of warranty is US$250 million. The Directors and the Proposed
Directors consider it unlikely, based on the due diligence that has
been undertaken, that a claim will materialise resulting in a
Settled Claim in the amount of US$250 million (or an uncapped claim
above that amount in respect of certain indemnities in the Share
Purchase Agreement), but should there be a Settled Claim for US$250
million, the maximum number of Ordinary Shares that Upstream
Capital could elect to receive is approximately 1.923 billion
Ordinary Shares assuming the minimum issue price of 10 pence based
on the US Dollar/Sterling exchange rate at the Latest Practicable
Date. Shareholders should note that the maximum number of Ordinary
Shares that might be issued to Upstream Capital as Settled Claim
Shares may be more than this amount because: (i) if the US Dollar
appreciates against Sterling, the Sterling value of a Settled Claim
of US$250 million would be greater than the Sterling value as at
the Latest Practicable Date; and/or (ii) as a result of uncapped
Settled Claims.
In addition:
-- Mercuria currently holds the Mercuria Existing Warrants which
entitle it to subscribe for up to 8,463,325 new Ordinary
Shares;
-- Mercuria also has the right to deferred consideration under
the Share Exchange Agreement to be satisfied by the issue of the
Share Exchange Shares. Pursuant to the Share Exchange Termination
Agreement, the Share Exchange Shares will be issued to Mercuria EAM
on Completion and the Share Exchange Agreement will terminate;
and
-- Mercuria also has the right to convert its loan into
approximately 39,704,926 Ordinary Shares pursuant to the
Convertible Loan Agreement (including accrued interest to 31 July
2017), however, this right will become irrelevant as the Company
has undertaken to repay this facility in cash in full within 3
Business Days of receipt of the advance of funds under the Bridging
and Working Capital Facilities Agreement, which advance has to be
paid within one Business Day of Admission. Further details of the
repayment of this loan and other loans from Mercuria are set out in
paragraph 13.1(g) of Part 10 of the Admission Document.
Following Completion, if Mercuria exercises the Mercuria
Existing Warrants in full and assuming no other acquisition or
disposal of Ordinary Shares, the Concert Party would then own
1,971,758,015 Ordinary Shares representing approximately 78 per
cent. of the Company at that time (assuming that the total share
capital comprises the Enlarged Share Capital plus the 8,463,325
Ordinary Shares issued pursuant to the exercise of the Mercuria
Existing Warrants only).
Following Completion, if Mercuria exercises the Mercuria
Existing Warrants in full and in the event that there is a Settled
Claim in the amount of US$250 million and Upstream Capital elects
to settle the claim by way of receiving Settled Claim Shares for
the full amount and in the event that the issue price for the
Settled Claim Shares would be 10 pence and that the US$250 million
claim value would be converted at the US Dollar/Sterling exchange
rate at the Latest Practicable Date (and assuming that no other
Ordinary Shares are issued from the date of the Admission Document
up to that time, other than the Consideration Shares and the Share
Exchange Shares and, in particular, Integra does not receive the
Integra Shares and consequently Upstream Capital does not receive
any Deferred Consideration Shares), the Concert Party would then
own 3,894,834,938 Ordinary Shares, representing approximately 87.51
per cent. of the total voting rights of the Company at that time
subject to movements in the Sterling/US Dollar exchange rate and/or
if there is an uncapped Settled Claim as referred to above.
Integra is the beneficiary of the fee payable under the
Transaction Fee Services Agreement, further details of which are
set out in paragraph 13.1(i) of Part 10 of the Admission
Document.
In the event that Integra receives the Integra Shares in
accordance with the terms of the Transaction Fee Service Agreement
six months following Admission (the number of Integra Shares being
based on the volume weighted average price post Completion, but
subject to a floor and a cap on such price, giving a range of
7,410,254 to 15,041,709 Integra Shares), Upstream Capital will be
entitled to receive (without further payment) such number of
Deferred Consideration Shares that would enable it to maintain a
percentage holding in the Company equal to the percentage of the
Enlarged Share Capital represented by the Consideration Shares
(i.e. 75.38 per cent.).
Following Completion, if (i) Integra has received the maximum
number of Integra Shares and Upstream Capital has received the
maximum number of Deferred Consideration Shares, and (ii) Mercuria
exercises the Mercuria Existing Warrants in full and (iii) in the
event that there is a Settled Claim in the amount of US$250 million
and Upstream Capital elects to settle the claim by way of receiving
Settled Claim Shares for the full amount and in the event that the
issue price for the Settled Claim Shares would be 10 pence and that
the US$250 million claim value would be converted at the US
Dollar/Sterling exchange rate at the Latest Practicable Date (and
assuming that no other Ordinary Shares are issued from the date of
the Admission Document up to that time, other than the
Consideration Shares and the Share Exchange Shares), the Concert
Party will then own 3,940,884,665 Ordinary Shares, representing
approximately 87.34 per cent. of the total voting rights of the
Company at that time subject to movements in the Sterling/US Dollar
exchange rate and/or if there is an uncapped Settled Claim as
referred to above.
For further details of the Share Purchase Agreement, the Share
Exchange Termination Agreement and the Mercuria Existing Warrants,
please refer to paragraph 8 of Part 1 and paragraphs 4.1 and 13.1
of Part 10 of the Admission Document.
The Company also proposes to issue the Mercuria Warrants to
Upstream Capital, at Completion, as part of the terms of the
Transaction. Under the terms of the Mercuria Warrant Instrument,
the Mercuria Warrants are only exercisable following an
announcement by the Company through a Regulatory Information
Service ("Relevant Announcement") that all or some of the Existing
Warrants (excluding the Mercuria Existing Warrants) have been
exercised. In these circumstances, Upstream Capital has the right
to exercise up to such number of its Mercuria Warrants as to enable
the Mercuria Group to maintain its percentage holding in the
Company immediately prior to the issue of the new Ordinary Shares
referred to in the Relevant Announcement calculated assuming that
any of the 8,463,325 Mercuria Existing Warrants which may remain
unexercised had been exercised and subject to a maximum deemed
holding of 78 per cent. for the purposes of calculating Upstream
Capital's proportionate entitlement. For further details of the
Mercuria Warrants, please refer to paragraph 15 of Part 1 and
paragraph 13.1(d) of Part 10 of the Admission Document.
Waiver of Rule 9 of the City Code
The issue of the Consideration Shares would ordinarily incur an
obligation under Rule 9 of the City Code for the Concert Party to
make a general offer for the remainder of the entire issued share
capital of the Company. Additionally, the issue of the Deferred
Consideration Shares, the exercise of the Mercuria Warrants and/or
the issue of any Settled Claim Shares (if the aggregate holding of
the Concert Party or in some cases, the relevant member of the
Concert Party at that time was below 50 per cent) would also
ordinarily incur an obligation under Rule 9 of the City Code for
the Concert Party to make a general offer for the remainder of the
entire issued share capital of the Company.
The Company has applied to the Takeover Panel for a waiver of
Rule 9 of the City Code in order to permit the Transaction, the
issue of the Consideration Shares, the issue of any Deferred
Consideration Shares and the exercise of the Mercuria Warrants and
the issue of any Settled Claim Shares without triggering an
obligation on the part of the Concert Party to make a general offer
for the balance of the Ordinary Shares not held by them. The
Takeover Panel has agreed to waive the obligation to make a general
offer to Andes Shareholders that would otherwise arise as a result
of the issue of the Consideration Shares, or any subsequent issue
of the Deferred Consideration Shares, the exercise of any of the
Mercuria Warrants or the issue of any Settled Claim Shares, subject
to the approval of the Independent Shareholders voting on a poll at
the General Meeting. Accordingly, the Waiver Resolution being
proposed at the General Meeting will be taken by means of a poll of
Independent Shareholders attending and voting at the General
Meeting. In addition to Mercuria EAM, the Integra Shareholders are
not deemed Independent Shareholders for the purposes of the Waiver
Resolution because José Luis Manzano, Integra Capital USA LLC,
Vetalir International S.A. and Nicolas Mallo Huergo are connected
to Integra, the beneficiary of the fee payable under the
Transaction Fee Services Agreement. None of the members of the
Concert Party nor any of the Integra Shareholders are permitted to
exercise their voting rights in respect of the Waiver Resolution
but Mercuria EAM has irrevocably undertaken to exercise its voting
rights in favour of the Resolutions (other than the Waiver
Resolution) and the Integra Shareholders may exercise their voting
rights in respect of the Resolutions (other than the Waiver
Resolution).
The City Code requires the Independent Directors to obtain
competent independent advice regarding the merits of the
transaction which is the subject of the Waiver Resolution, the
controlling position which it will create and the effect which it
will have on the Andes Shareholders generally. Matthieu Milandri a
director of the Company, has been excluded from the consideration
of the Waiver Resolution, as he is also an employee of Mercuria
Energy Trading, which is a subsidiary of Mercuria EG.
Accordingly, Stockdale, in its capacity as the Company's
financial adviser, has provided formal advice to the Independent
Directors regarding the Transaction and to the Independent
Directors and Nicolas Mallo Huergo regarding the Waiver. Stockdale
confirms that it is independent of the Concert Party and has no
commercial relationship with any member of the Concert Party.
As noted above, immediately following Admission, the Concert
Party will hold more than 50 per cent. of the voting rights of the
Company. Rule 9 provides that, where any person, together with
persons acting in concert with him, holds more than 50 per cent. of
the voting rights of a company then they will not generally be
required to make a general offer to the other Andes Shareholders to
acquire the balance of their shares, although individual members of
the Concert Party will not be able to increase their percentage
interest in shares through or between a Rule 9 threshold without
the Takeover Panel's consent.
If the Waiver Resolution is passed by the Independent
Shareholders at the General Meeting, the Concert Party will be free
to acquire further interests in the Company's Ordinary Shares
without incurring any further obligation to make a general offer
for the Company.
In addition, the Concert Party will not be restricted from
making an offer for the Ordinary Shares in the Company which it
will not own post-Admission, save that Upstream Capital and
Mercuria EAM have agreed, pursuant to the Relationship Agreement,
with the Company that they shall not for a period of two years from
Admission undertake a transaction in Ordinary Shares which would
require these parties or any person acting in concert with them to
make a mandatory offer under the Takeover Code without having first
obtained prior approval of a majority of the Independent
Non-executive Directors and (if applicable) any relevant approval
from Andes Shareholders to exempt Upstream Capital and Mercuria
EAM, their associates and any person acting in concert with them
from any such requirement, subject to certain exceptions if and
after (i) any third party makes or announces a firm intention to
make an offer to acquire Ordinary Shares carrying (together with
shares held by it and those acting in concert with it) 30 per cent.
or more of the voting rights (including by way of a scheme of
arrangement) or (ii) the Company seeks or announces an intention to
seek shareholder approval for an issue of new shares to a third
party which would require the grant of a waiver of Rule 9 of the
Takeover Code.
11. EFFECT OF THE TRANSACTION ON THE ENLARGED GROUP
The Transaction will not have an immediate effect on the
day-to-day business or the assets of either Andes or PETSA. The
businesses of Andes and PETSA will continue to be oil and gas
exploration and production focusing on Argentina.
The Directors and the Proposed Directors believe that the
Transaction will allow the Enlarged Group increased access to the
equity capital and debt markets and therefore facilitate further
investment in the short term and over the long term the development
of the assets of the Enlarged Group. The Directors and the Proposed
Directors also believe that significant operational synergies will
derive from the Transaction, but have not quantified any such
synergies.
12. DIRECTORS AND SENIOR MANAGEMENT
The Board
The Board currently comprises Nicolas Mallo Huergo, German
Ranftl, Juan Carlos Esteban, David Jackson, Nigel Duxbury, Carolina
Landi, Javier Alvarez, Matthieu Milandri and Sir Michael Rake.
On Completion Sir Michael Rake, currently a non-executive
director of the Company will become Non-Executive Chairman and
Nicolas Mallo Huergo, currently Executive Chairman, will become a
non-executive director.
On Completion, German Ranftl, Juan Carlos Esteban, Nigel Duxbury
and Carolina Landi will resign as Directors and Anuj Sharma, Philip
Wolfe, Guillaume Vermersch, Garrett Soden and John Bentley will be
appointed as new directors of the Company.
Accordingly, the Board immediately following Completion will
consist of:
Sir Michael Rake (age 69), Non-Executive Chairman
Sir Michael is Chairman of BT Group plc as well as Chairman of
payments processing firm Worldpay Group plc, a director of S&P
Global and Chairman of Majid Al Futtaim Holdings LLC.
He was President of the CBI from 2013 to 2015; a member of the
Prime Minister's Business Advisory Group from 2010 to 2015;
non-executive director of Barclays plc from 2008, becoming Deputy
Chairman from 2012 to 2015; Chairman of the private equity
oversight group, the Guidelines Monitoring Committee from 2008 to
2013; Chairman of easyJet plc from 2010 to 2013 and the first
Chairman of the UK Commission for Employment and Skills from 2007
to 2010. He was a director of the Financial Reporting Council from
2008 to 2011 and Chairman of Business in the Community from 2004 to
2007.
From May 2002 to September 2007, Sir Michael was International
Chairman of KPMG. Prior to his appointment as International
Chairman, he was Chairman of KPMG in Europe and Senior Partner of
KPMG in the UK.
Sir Michael was knighted in 2007. In 2011 he received the
British American Business UK Transatlantic Business Award in
recognition of outstanding business leadership. In 2013, he
received the Channing Award for Corporate Citizenship, was voted
the FTSE 100 non-executive director of the year and received the
ICAEW outstanding achievement award.
Anuj Sharma (age 44), Chief Executive Officer
Anuj has approximately 20 years' experience in the oil and gas
industry and was appointed as nonboard level CEO of Andes in March
2017. Prior to that, he headed Mercuria EG's investments in
Argentina. As the head of Mercuria EG's Argentine subsidiaries, he
led PETSA, Mercuria Group's upstream oil and gas company in
Argentina, to significant exploration and development success,
which resulted in more than a doubling of PETSA's production and
reserves. Prior to that, he was the Vice President and Director,
originating investment opportunities for a multi-billion dollar
family office in Houston, USA. Anuj also held positions in upstream
equity research and portfolio management for a large commodity
investment firm, making principal investments in the upstream oil
and gas sector and managing the firm's unconventional shale
portfolio in the US. He started his oil and gas career as an
engineer for Schlumberger Oil Field Services. Anuj received his
Bachelor of Electrical Engineering in India and an MBA from Duke
University, USA, where he graduated with the highest honours as a
Fuqua Scholar.
Philip Wolfe (age 49), Chief Financial Officer
Philip Wolfe has 27 years' experience working in the oil and gas
industry as an adviser and corporate financier. Most recently
Philip was Chief Financial Officer and a board member of Soma Oil
& Gas, a UK registered independent oil and gas company. Prior
to being a CFO, Philip was MD, Head of Oil and Gas, EMEA at UBS
Investment Bank and Global Head of Oil and Gas at HSBC. Previously
he was a Director at Deutsche Bank's Global Energy & Utilities
team in London and a Vice President at Merrill Lynch's Oil and Gas
team in Singapore. During his eight years at Merrill Lynch, Philip
was based in Singapore from 1996 until 1998 and was previously in
London for four years and New York for two years. During his 23
years as an investment banker to the oil and gas industry, his
expertise was predominantly in buying and selling assets/companies,
including farm-outs and raising equity and debt for oil and gas
companies, across the entire energy chain with a particular
interest in the E&P sector. Philip has a BSc Honours degree in
Economics from the University of Bristol.
Nicolas Mallo Huergo (age 47), Non-Executive Director
Nicolas has been a member of the Company's board since 2007.
Nicolas graduated from the Universidad Católica Argentina in 1993
with a law degree and obtained a Master in Law (LLM.) with honours
at North-western University School of Law, Chicago, U.S.A, in 1999.
Within his area of specialisation, he has advised national and
foreign firms on corporate matters, mergers, acquisitions,
privatisations and financings, unsolicited bids, tender offers,
exchange offers and proxy fights, adoption of stock option plans,
leveraged buy-outs, spin-offs, recapitalisations and other
restructuring transactions, strategic investments and joint
ventures, venture capital transactions and project finance. His
advice includes operation structuring, acquisition of
telecommunications and media companies, cross border contracts with
international corporations. He has been and is a director of a
number of local and foreign companies. Previously, he practised as
a lawyer at a major law firm in Argentina.
Matthieu Milandri (age 42), Non-Executive Director
Matthieu has been Investment Director at Mercuria Energy Trading
since December 2011, with a particular focus on upstream oil and
gas assets. Matthieu joined the board of Andes in 2013. Prior to
joining the Mercuria Group, Matthieu was CFO of Candax Energy Inc,
a TSX-listed upstream company and Business Development and
Financing Manager at Geopetrol, a private upstream group. Matthieu
spent nine years with BNP Paribas in Frankfurt, Paris, New York,
Houston and Geneva working in the oil and gas and commodities
groups, providing him with a detailed understanding of junior oil
and gas companies across the world. He graduated from ESSEC
Business School in 1998 with a degree equivalent to an MBA with a
specialisation in finance.
Guillaume Vermersch (age 47), Non-Executive Director
Guillaume serves as the Group Chief Financial Officer of
Mercuria Energy Group and Mercuria Energy Trading. He started his
career with Arthur Andersen as external auditor in Paris and joined
the bank Credit Agricole Indosuez (subsequently in Paris and
Geneva) as Account Manager in the Commodity Finance Division - Oil
and Energy products desk, where he served until 1997. He then
joined the ING/BBL Bank in Geneva as Accounts Chief Officer in the
Energy Finance Division. Guillaume left ING/BBL Bank in 2000 to
become Head of Credit and Finance for Europe with Sempra Oil
Trading SARL, Geneva. He studied at Ecole Supérieure De Commerce De
Paris (E.S.C.P., Paris) graduating with a Master's degree in
Financial Audit and Consulting with special honours in 1994. In
2003, he studied at the Manchester Business University for MBA in
Corporate Finance.
Garrett Soden (age 43), Non-Executive Director (Independent)
Garrett has extensive experience as a senior executive and board
member of various public companies in the natural resources sector.
He has worked with the Lundin Group for the last decade. He is
currently President and CEO of Africa Energy Corp., a Canadian oil
and gas exploration company focused on Africa. He is also a
Non-Executive Director of Etrion Corporation, Gulf Keystone
Petroleum Ltd., Panoro Energy ASA and Petropavlovsk PLC.
Previously, he was Chairman and CEO of RusForest AB, CFO of Etrion
and PetroFalcon Corporation and a Non- Executive Director of PA
Resources AB. Prior to joining the Lundin Group, Garrett worked at
Lehman Brothers in equity research and at Salomon Brothers in
mergers and acquisitions. He also previously served as Senior
Policy Advisor to the U.S. Secretary of Energy. Garrett holds a BSc
honours degree from the London School of Economics and an MBA from
Columbia Business School.
John Bentley (age 69), Non-Executive Director (Independent)
John has over 40 years' experience in the natural resources
sector. He is an experienced board member being a past Managing
Director of Gencor's Brazilian mining company, Sao Bento Mineracao
and Chief Executive of Engen's exploration and production division.
In 1996, he was instrumental in floating Energy Africa Ltd on the
Johannesburg stock exchange and became Chief Executive for the
following five years. More recently he was Executive Chairman of
First Africa Oil plc and served on the boards of Rift Oil plc,
Adastra Minerals Ltd, Caracal Energy Inc and Scotgold Resources
Limited. He is currently on the board of a number of E&P
companies including as Chairman of Faroe Petroleum plc, Deputy
Chairman of Wentworth Resources Ltd and Non- Executive Director of
Africa Energy Corp. John holds a degree in Metallurgy from Brunel
University.
Javier Alvarez (age 45), Non-Executive Director
(Independent)
Javier is an Agricultural Engineer and has a Masters in
Environmental Politics and Globalisation from King's College,
University of London. Javier's career, which is based on his skills
on building projects with diverse stakeholders and on his
experience in fundraising, was developed in the private sector in
London; he was Executive Director of the British Argentine Chamber
of Commerce BACC from 2007 to 2011 (he is currently Overseas
Director and Member of the Board of the BACC) and he was Business
Development Director at a family office in Cambridge dealing with
investments in the primary sector. In 2012, he joined the board of
Andes as a non-executive director.
David Jackson (age 68), Non-Executive Director (Independent)
David has more than 30 years' experience in international
banking and finance having held senior positions in investment
banking and investment management in Standard Chartered Bank
(1990-2008), where he was a Managing Director in London and Hong
Kong, Scandinavian Bank (1977-1990) in London, Bahrain, Singapore
and Hong Kong where he was an Executive Director and a member of
the Bank's General Management Committee and Finance for Industry,
now 3i, where he was a Senior Legal Advisor (1973-1977). He retired
from Standard Chartered Bank in 2008.
Further information on the Directors and the Proposed Directors,
including interests held by them in the share capital of the
Company, is given in Part 10 of the Admission Document.
Senior Management
Other members of Senior Management immediately following
completion will consist of the following:
Nigel Duxbury (age 58), Company Secretary
Nigel has over 10 years of experience in the oil and gas
industry which began with the reverse takeover of the Company in
2007. He has a background in finance and accountancy, having
qualified as a chartered accountant with Touche Ross, London. Nigel
has extensive experience both as a finance director and senior
executive in small and large, quoted and unquoted, companies within
Europe, Asia and the Americas. Nigel Duxbury is also currently a
Non-Executive Director of the Company, but will step down from the
Board upon Admission.
Javier Vallesi (age 50), Chief Operating Officer
Javier Vallesi has more than 22 years of experience in the oil
and gas industry. Before his current role as Chief Operating
Officer, Javier was Head of Sub-Surface Engineering at PETSA.
Previous to PETSA, Javier held various technical and management
positions in leading Argentine oil and gas companies such as YPF
(Cuyo and Neuquén Basin-Development Manager), ASTRA CAPSA (Cuyo
Basin-Senior Reservoir Engineer) and Bridas SAPIC (Golfo San Jorge
Basin). Javier holds a degree in Petroleum Engineering from
Universidad Nacional de Cuyo in Mendoza and a Post Graduate
Management Programme from IAE (Instituto de Altos Estudios
Empresariales) in Buenos Aires.
Pablo Varetto (age 51), Head of Finance and Controller
(Argentina)
Pablo Varetto has more than 25 years of experience in Finance,
Administration and Business development in the oil and gas industry
in Argentina. Prior to PETSA, Pablo held CFO positions at President
Petroleum S.A., Americas Petrogas Argentina S.A., Occidental
Argentina E&P, and Vintage Oil Argentina, Inc. Pablo also
served as Manager-Finance and Administration at British Gas
Argentina, S.A and started his career in audit and accounting with
Arthur Andersen & Co. Pablo is a Certified Public Accountant
from Universidad de Buenos Aires and also holds a Master in
International Business degree from Universidad de Belgrano, L'Ecole
de Ponts et Chausses.
Juan Carlos Esteban (age 59), Senior Manager: Special
Operations
Juan Carlos has more than 30 years of experience in the oil and
gas industry. Prior to joining the Company in June 2009, he spent
23 years at YPF working in various management positions. At YPF,
Juan Carlos was responsible for the production activities of YPF's
major fields in the Neuquén
province, North of Mendoza and Malargue. He also served as a
District Manager of Repsol-YPF, being responsible for the
operations in the fields of Neuquén and Cuyo basins corresponding
to Mendoza Province. Juan Carlos was also Production Manager of the
technical staff for Argentina and Bolivia at Repsol-YPF. He has
significant knowledge and experience in the areas where the Andes
Group holds its licences.
Pablo Arias (age 37), Manager: Business Development
Pablo holds a Bs. degree in International Economics, an Msc. in
Finance from Universidad Torcuato Di Tella, and an MBA from New
York University. He has more than 12 years of experience working in
the financial and oil and gas industries, with broad experience,
participating and leading, in financial and debt restructuring,
capital raisings, M&A, project finance and developing and
executing new businesses. Prior to joining the Company, Pablo was
an investment banker at JP Morgan. Pablo has been working as
Planning Manager at Andes and also served as chief financial
officer and interim chief executive officer of Interoil.
Marina Alvarez Toledo (age 41), Manager: Information
Technology
Marina has over 14 years of experience in the management of
information technology platforms in the oil and gas industry. Prior
to joining PETSA in 2017, Marina held different technical and
management positions in leading oil and gas companies such as YPF,
Pioneer Natural Resources and Apache Corporation. Marina was in
charge of IT department at YSUR, which was the local holding
company for assets YPF acquired from Apache Corporation, and led
the integration of IT infrastructure of YSUR with YPF. She holds a
System Analyst degree from the Universidad Abierta
InterAmericana.
Greg Easley (age 32), Senior Manager: Reservoir &
Engineering
Greg is a Texas Licenced Professional Engineer with over ten
years of experience in the oil and gas industry. Greg holds a
bachelor's degree from the University of Oklahoma and a Master's
Degree from the University of Houston, both in petroleum
engineering. Greg began his career at ExxonMobil Development
Company, working in the development of offshore international
oilfields. He then moved to Marathon Oil where he worked in a
variety of roles, from reservoir engineering onshore waterfloods to
drilling wells in the unconventional Bakken formation of North
Dakota. After Marathon, Greg worked at a multi-billion dollar
family office where he evaluated new investment opportunities in
the oil and gas sector and also managed their unconventional
reserves and exploration portfolio. Since then he has been with
Mercuria, working in reserve and reservoir management of their
worldwide oil and gas portfolio and advising the company on any new
acquisition or divestiture opportunities.
Erico Stahlschmidt (age 67), Senior Manager: Subsurface
Erico Stahlschmidt has more than 37 years of experience in the
oil and gas industry. At PETSA, Erico leads a team of geologist and
geophysicists. He holds a degree in Geology from Universidad de
Buenos Aires (UBA). Prior to PETSA, Erico held different technical
positions at Argentine and international oil and gas companies such
as Petrolera San Jorge where he was a Development Geologist,
Anderson Exploration SA where he was an Exploration Geologist for
the Cuyo and Neuquén basins, Petrolera Santa Fe-Devon Energy where
he served as a Senior Geologist for their natural gas fields,
Petrobras Energía where he served as an evaluation Geologist for
new assets in Río de Janeiro, Vintage Oil Argentina where he served
as a Geologist in the Reservoir Management Team for the Golfo San
Jorge and Cuyo basins and Oxy where he served as asset acquisition
and evaluation Geologist in Houston, USA.
Jorge Gonzalez (age 57), Senior Manager: Drilling &
Completion
Jorge Gonzalez has more than 26 years of drilling and
completions experience in the oil industry, spanning various
basins, such as the Cuyo, Neuquén, Golfo San Jorge and Austral
basins. Prior to PETSA, Jorge was Drilling Manager at Petroandina
Resources and also worked as Drilling
Superintendent and Drilling Engineer for Petrolera Perez
Companc, Total, Pioneer NR, Apache and Americas Petrogas. Jorge has
extensive experience in conventional drilling operations,
directional drilling, tight gas drilling, stimulations and frac
operations. Jorge's field experience includes managing operations
with 12 rigs where his responsibilities included drilling
operations, managing of service contractors, material supplies
including purchasing and warehouse. Jorge holds a degree in
Petroleum Engineer from Universidad Nacional de Cuyo and he is
member of the Technical Commission of LADS Mendoza Chapter (Latin
American Drilling Safety - Mendoza).
Nicolas García (age 39), Senior Completion Engineer
Nicolas has more than 14 years of experience in the oil and gas
industry. Nicolas holds a degree in Industrial Engineering from
Universidad Nacional de Cuyo, Mendoza, Argentina. Before PETSA, he
worked for Halliburton for 14 years having responsibilities as
field frac engineer, and technical advisor in Buenos Aires,
Argentina and Denver, USA, and has extensive experience in tight
and unconventional projects. His areas of expertise include the
Golfo San Jorge, Neuquén and Cuyo basins in Argentina, and
Williston, Denver Julesburg, San Joaquin, Uinta and San Juan basins
in the US. As a technical advisor in Argentina, Nicolas
participated in various exploratory projects in Vaca Muerta, Molles
and Agrio source rocks in the Neuquén basin. In the US, with
Halliburton, he was responsible for the petrophysical and
geomechanical evaluation of unconventional projects in the Rocky
Mountains region. Nicolas is also author of eleven publications and
was in charge of teaching petrophysics for unconventional
reservoirs at Halliburton's Latin America training centre.
Pablo Prado Zalazar (age 47), Production, Maintenance and
Facilities Manager
Pablo has more than 22 years of experience in the oil and gas
industry. Prior to PETSA, Pablo held various managerial and
supervisory positions with increasing responsibilities within the
oil and gas industry. He worked for Petrolera Perez Companc,
Petrolera El Trebol, Petrobras Energy and Petrolera Entre Lomas
having responsibilities as Field Engineer, Pulling & Workover
Rigs Supervisor, Oil and Gas Control and Surveillance Engineer,
Production Engineer and Facilities Engineer in the Cuyo and Neuquén
basins. At Petrolera Entre Lomas, he held the Production Manager
position and also Production Engineering Manager position. He holds
a degree in Petroleum Engineering from Universidad Nacional de Cuyo
and a masters degree in Energy from Universidad Nacional del
Comahue in Neuquén, Argentina.
13. NEW EMPLOYEE SHARE PLANS
The Company's approach to remuneration for its executive
directors from Admission will be intended to attract and retain
individuals of a high calibre and appropriate experience; to align
incentives with the Company's strategic goals and business plans;
to deliver rewards for strong and sustainable business performance;
and to align the interests of the executive directors with those of
the Andes Shareholders over an appropriate period.
Subject to Andes Shareholders' approval of the Waiver
Resolution, the Transaction Resolutions, Resolution 5 and
Admission, the Board has agreed to adopt the Andes Energia Long
Term Incentive Plan and the Andes Energia Deferred Bonus Plan.
The Remuneration Committee is expected to consider granting
awards under the New Employee Share Plans following Admission in
order to incentivise management.
Further details of the New Employee Share Plans are set out in
paragraph 10 of Part 10 of the Admission Document.
14. CORPORATE GOVERNANCE
The Company is not and, upon Admission, will not be, subject to
the Corporate Governance Code applicable to companies listed on the
Official List. However, the Directors and the Proposed Directors
recognise the importance of sound corporate governance and the
Company intends to report against, and to substantially comply
with, the Corporate Governance Code. Whilst the Directors and the
Proposed Directors recognise that immediately following Completion
it will not be possible to adopt all the provisions of the
Corporate Governance Code, it is the Directors' and the Proposed
Directors' intention to adopt the remaining provisions in the short
term thereafter. The Directors and the Proposed Directors intend to
also take account of institutional shareholder and governance rules
and guidance on disclosure and shareholder authorisation.
The Board intends to meet at least eight times a year and may
meet at other times at the request of one or more of the directors
of the Company.
The Audit and Risk Committee, the Remuneration Committee, the
Nomination Committee and the Integration Committee of the Enlarged
Group will each have formally delegated rules and
responsibilities.
On Admission, the members of each committee (including
non-director members for the Integration Committee) and directors
with formal observer rights on each committee will be as
follows:
Chairman Members
Audit and Risk Garrett Soden Sir Michael Rake
Committee David Jackson
Javier Alvarez
Guillaume Vermersch*
Remuneration John Bentley Sir Michael Rake
Committee Garrett Soden
David Jackson
Matthieu Milandri*
Nicolas Mallo
Huergo*
Nomination Committee Sir Michael Rake Javier Alvarez
John Bentley
Nicolas Mallo
Huergo*
Integration Committee Anuj Sharma Philip Wolfe
Matthieu Milandri
Nicolas Mallo
Huergo
Javier Valesi
Pablo Varetto
*Observer rights only
Audit and Risk Committee
The Audit and Risk Committee will consist of not less than three
members, at least one of whom will have recent and relevant
financial experience and the quorum for meetings will be two
members. The majority of the committee will be Independent
Non-Executive Directors. The chairman shall be an Independent
Non-Executive Director and shall not be the chairman of the
Company. The committee will meet at such time as may be necessary
and at least four times a year.
Its responsibilities will include: monitoring the integrity of
the Company's financial statements and formal announcements;
reviewing financial reporting issues and significant accounting
policies and disclosures in financial reports; reviewing the
effectiveness of the Company's internal audit function and risk
management systems; making recommendations to the Board on the
appointment or re-appointment of the Group's external auditors;
overseeing the New Board's relationship with the external auditors
(including an external reserves auditor) and, where appropriate,
the selection of new external auditors; and ensuring that an
effective whistle-blowing procedure is in place.
Remuneration Committee
The Remuneration Committee will consist of not less than three
members and the quorum for meetings will be two members. All the
members of the committee will be independent nonexecutive
directors. The chairman shall be an Independent Non-Executive
Director and shall not be the chairman of the Company. The
committee will meet at such times, as may be necessary and at least
three times a year.
The Remuneration Committee will be responsible for determining
and agreeing with the Board the remuneration policy for the Chief
Executive Officer, Chairman, Chief Financial Officer, Chief
Operating Officer/Secretary and Executive Directors, (together, the
"Relevant Individuals"); approving the design of, and determining
targets for, an incentive plan for the executive directors and
senior managers; reviewing the design of share incentive plans for
approval by the Board and Andes Shareholders, approving the
remuneration policy applicable to the Relevant Individual (no
Relevant Individual being involved in any decisions as to their own
remuneration); and within the terms of the agreed policy,
determining the remainder of the remuneration packages (including
pension) for each executive director and senior executive;
reviewing and having regard to pay and employment conditions across
the Enlarged Group, especially when determining annual salary
increases.
Nomination Committee
The Nomination Committee will consist of not less than three
members and the quorum for meetings will be two members. A majority
of the members will be independent non-executive directors. The
chairman of the committee shall be the chairman of the Company or
an independent non-executive Director. The chairman of the
committee will not however chair the committee when it is dealing
with the appointment of a successor to the chairmanship. The
committee will meet at such times, as may be necessary and at least
twice a year.
The Nomination Committee's responsibilities will include
reviewing the structure, size and composition of the Board and
making recommendations to the Board with regard to any changes
required; succession planning for directors and other senior
executives; identifying and nominating, for the Board approval,
candidates to fill Board vacancies as and when they arise;
reviewing annually the time commitment required of Non-Executive
Directors and making recommendations to the Board with regard to
membership of the Audit and Risk Committee and Remuneration
Committee in consultation with the chairman of each of these
committees.
Integration Committee
The Integration Committee will consist of six members comprising
the CEO, CFO, two Non- Executive Directors and two senior managers
of the Company and the quorum for meetings shall be at least three
members to include a majority of members who are Directors. The
Chairman of the committee will be Anuj Sharma. The committee shall
have an initial fixed term of 12 months from Admission. The
committee shall meet at regular intervals and at least twice a
month and can be held via a conference call.
The Integration Committee's responsibilities will include
reporting and making recommendations to the Board on all aspects of
the integration process, reviewing the ongoing appropriateness and
relevance of the Company's integration plan; overseeing and
reporting on the progress and compliance with the integration plan;
reporting to the Board on the post-Completion actions required by
the Share Purchase Agreement and any integration measures referred
to in other agreements or documents entered into in connection with
the Transaction; overseeing and reporting on the integration of day
to day operations, employees, IT systems, accounting and financial
reporting procedures, IP and real estate within the Enlarged
Group.
Other
The Company has adopted a share dealing code for Directors and
applicable employees (within the meaning of the AIM Rules for
Companies) of the Company for the purpose of ensuring compliance by
such persons with the provisions of the Market Abuse Regulation
relating to dealings in the Company's securities. The Directors and
the Proposed Directors consider that this share dealing code is
appropriate for a company whose shares are admitted to trading on
AIM.
15. WARRANTS
As at the Latest Practicable Date, the Company has issued
59,187,124 Existing Warrants which remain outstanding and which
entitle the relevant warrantholders to subscribe for 59,187,124
Ordinary Shares. The Existing Warrants include the Mercuria
Existing Warrants, which entitle certain members of the Mercuria
Group to subscribe for up to 8,463,325 Ordinary Shares in
aggregate.
Further details of the Existing Warrants are set out in
paragraph 4 of Part 10 of the Admission Document.
Mercuria Warrants
As part of the terms of the Transaction, the Company proposes to
issue, at Completion, the Mercuria Warrants which would entitle
Upstream Capital to subscribe for up to 179,838,924 Ordinary Shares
in certain limited circumstances. The purpose of the Mercuria
Warrants is to enable the Mercuria Group to maintain its percentage
holding in the Company, subject to the caveat described in the next
paragraph, in the event that any of the Existing Warrants (other
than the Mercuria Existing Warrants) are exercised and new Ordinary
Shares are issued.
Under the terms of the Mercuria Warrant Instrument, following an
announcement by the Company through a Regulatory Information
Service that all or some of the Existing Warrants (excluding the
Mercuria Existing Warrants) have been exercised ("Relevant
Announcement"), Upstream Capital has the right to exercise up to
such number of its Mercuria Warrants as enable it to maintain the
Mercuria Group's percentage holding in the Company immediately
prior to the issue of the new Ordinary Shares referred to in the
Relevant Announcement, calculated assuming that any of the
8,463,325 Mercuria Existing Warrants which remain unexercised had
been exercised and subject to a maximum deemed holding of 78 per
cent. for the purpose of calculating Upstream Capital's
proportionate entitlement. The exercise price shall be the same
price as the Existing Warrants which have been exercised.
Further details of the Mercuria Warrants are set out in
paragraph 13.1(d) of Part 10 of the Admission Document.
Resolution 2 at the General Meeting will seek Andes
Shareholders' approval of, inter alia, the issue of the Mercuria
Warrants to Upstream Capital.
16. RELATIONSHIP AGREEMENT
Upstream Capital and Mercuria EAM have agreed to exercise their
votes as Andes Shareholders and to procure the same in respect of
any connected person in accordance with certain restrictions set
out in the Relationship Agreement entered into between the Company,
Upstream Capital, Mercuria EAM and Mercuria EG. The restrictions
seek to ensure that the Enlarged Group is capable of carrying on
its business and making decisions independently and in the best
interests of the Enlarged Group and that any transactions between
any member of the Enlarged Group and Upstream Capital or any
connected person are made on an arm's length basis.
The main provisions of the Relationship Agreement are
conditional upon Admission and the Relationship Agreement will
terminate on Upstream Capital, Mercuria EAM and their associates
ceasing to hold directly or indirectly Ordinary Shares or
instruments capable of converting into Ordinary Shares conferring
in aggregate 5 per cent. or more of the Voting Rights.
For so long as Upstream Capital, Mercuria EAM and their
associates hold in aggregate not less than 20 per cent. of the
Voting Rights, they will be entitled to appoint two directors. For
so long as Upstream Capital, Mercuria EAM and their associates hold
in aggregate not less than 10 per cent. of the Voting Rights, they
will be entitled to appoint one director. For so long as Upstream
Capital, Mercuria EAM and their associates hold not less than 5 per
cent. of the Voting Rights, they will have the right to appoint an
observer to attend Board and Board committee meetings. A director
appointed pursuant to the Relationship Agreement will have the
right to attend as an observer at any Board committee meeting at
which no director appointed pursuant to the Relationship Agreement
is a member. Matthieu Milandri and Guillaume Vermersch will be
deemed to be appointed on behalf of Upstream Capital and Mercuria
EAM upon Admission.
The Company has agreed that Nicolas Mallo Huergo shall remain a
Director from Admission, and shall remain appointed as a Director
thereafter for a period of three years from Admission when and
until he resigns, subject to certain exceptions. Upstream Capital
and Mercuria EAM have undertaken to vote in favour of the
appointment or reappointment of Nicolas Mallo Huergo if his
appointment or reappointment is recommended by the Board during
this three year period.
The Company has also agreed to use reasonable endeavours to
procure that if Nicolas Mallo Huergo ceases to be a director of the
Company for any reason during the period of three years from
Admission, the Company via the Chairman at the time will consult
with the Minority Shareholders as soon as reasonably practicable
and take note of their reasonable comments as to the replacement
director and if the Minority Shareholders suggest a suitable
nominee, the Company will consider in good faith and acting
reasonably, the appointment of such nominee as the replacement
director. The provisions summarised in this paragraph and the
previous paragraph have been included in the Relationship Agreement
for the benefit of the Minority Shareholders, who have the benefit
of enforcement rights under the Contracts (Rights of Third Parties)
Act in relation to the right in this paragraph.
Further details of the Relationship Agreement are set out in
paragraph 13.1(c) of Part 10 of the Admission Document.
17. BRIDGING AND WORKING CAPITAL FACILITIES AGREEMENT
The Company has entered into the Bridging and Working Capital
Facilities Agreement with Mercuria Energy Trading pursuant to which
Mercuria Energy Trading has conditionally agreed to provide the
Company (i) the Term Loan in the principal amount of US$87,015,353
and (ii) a revolving credit facility in the principal amount of
US$72,984,647. The making of the loans is conditional on, inter
alia, completion of the Transaction and Admission.
The term loan is to be used towards funding the redemption of
the Company's existing debt with third parties and financing
transaction costs. The Revolving Credit Facility is to be used
towards general corporate and working capital purposes.
Further details of the Bridging and Working Capital Facilities
Agreement are set out in paragraph 13.1(g) of Part 10 of the
Admission Document.
18. DIVID POLICY
It is not the intention of the Enlarged Group to make
distributions by way of dividend payments for the foreseeable
future following the completion of the Transaction. The Directors
and the Proposed Directors consider that it is in the Andes
Shareholders' best interests to reinvest the profits of the
Enlarged Group in its business growth opportunities. The Board
intends to regularly review and potentially adjust the dividend
policy as the Enlarged Group's asset portfolio and financial
position evolve over the forthcoming years.
19. CHANGE OF NAME
In view of the size and nature of the Transaction, it is
proposed that, subject to Andes Shareholders' approval of
Resolution 3 as a special resolution and Admission, the name of the
Company be changed to Phoenix Global Resources plc.
If Resolution 3 is duly passed at the General Meeting, the
Company's AIM symbol will change to PGR and its website address
will be changed to www.phoenixglobalresources.com following
Admission.
20. AMMENT TO THE ARTICLES
Due to the proposed increase in the number of directors of the
Company as part of the Transaction, it is proposed that, subject to
the passing of Resolution 3 at the General Meeting, the limit on
directors' fees in the Articles is increased from GBP100,000 to
GBP750,000. The new threshold will enable the Company to pay the
fees of the relevant Directors and Proposed Directors in accordance
with their letters of appointment, and give the Company some
headroom in relation to any further appointments of directors or
increase in directors' fees.
When the Company was admitted to trading on AIM in 2007, the
Company's central management and control was deemed to be in
Argentina which meant that, at the time, the City Code did not
apply to the Company; however the Company chose to include
provisions in its Articles which afforded similar protections to
the City Code.
The City Code has applied to the Company since 30 September
2013, when new rules on which companies are subject to the City
Code came into effect. Since that date, the provisions in Article
165 are no longer required. The Board proposes to take this
opportunity to amend its Articles by deleting the now redundant
provisions relating to protections similar to the City Code.
Resolution 3 will be proposed at the General Meeting as a
special resolution to approve, inter alia, the amendment to the
Articles in the manner described above.
21. INTEROIL DEMERGER
The Board believes that it will be in the interests of Andes
Shareholders for the Company to focus on oil and gas exploration
and production in Argentina only. Outside of Argentina, the Company
has interests in Colombia, comprising the Interoil Shares and
certain licences in the Llanos Basin and the Valle Magdalena Medio
Basin.
In line with this strategy, the Board proposes to transfer
513,598 Interoil Shares to the US Andes Shareholders and to demerge
the remaining Interoil Shares, which are currently held by the
Company's wholly-owned subsidiary, Andes Interoil, to be effected
by way of a distribution in specie to pre-Completion Andes
Shareholders (save for the US Andes Shareholders and Other US Andes
Shareholders).
The Board has decided to propose the Interoil Demerger for the
following reasons:
-- it will help the Company focus on oil and gas exploration and
production in Argentina only; and
-- it will allow Andes Shareholders who are on the Andes Share
Register at the Interoil Demerger Record Time to benefit from the
value of the Interoil Shares before the completion of the
Transaction when their percentage holding in the Company will be
heavily diluted.
The Interoil Demerger will require the Company to declare a
distribution in specie. As the Company does not have sufficient
distributable reserves to declare a distribution in specie, the
Board proposes the Reduction of Capital to reduce the Company's
share premium account by GBP60 million to create sufficient
distributable reserves to effect the Interoil Demerger.
In preparation for the proposed Interoil Demerger, the Company
has established TrustCo, a Guernsey trust company, and TrustCo has
incorporated GuernseyCo, a wholly-owned Guernsey incorporated
subsidiary.
The Interoil Demerger will be implemented as follows:
-- the Company will acquire the Interoil Shares from Andes
Interoil for book value (such consideration to be left outstanding
as an inter-company balance);
-- the Company will seek to reduce its share premium account by
GBP60 million pursuant to a Court approved reduction of capital
under the Companies Act;
-- following such reduction, the Company will declare a
distribution in specie on the Ordinary Shares equal to the book
value of the Interoil Shares to be demerged; and
-- the distribution in specie will be satisfied by the transfer
by the Company to GuernseyCo of the Interoil Shares. In return for
this transfer, GuernseyCo will allot and issue Exchangeable
GuernseyCo Shares to the Andes Shareholders (save for the US Andes
Shareholders and any Other US Andes Shareholders) who are
registered on the Andes Share Register at the Interoil Demerger
Record Time, on the basis of one Exchangeable GuernseyCo Share for
each Ordinary Share held by them at that time. Following the
Interoil Demerger becoming effective, the holders of such
Exchangeable GuernseyCo Shares shall be entitled to receive one
Interoil Share for every 36 Exchangeable GuernseyCo Shares redeemed
(subject to adjustment). Any Exchangeable GuernseyCo Shares
remaining which have not been redeemed in the period following six
months from the date of completion of the Interoil Demerger are
intended to be sold and the net proceeds distributed to the holders
of the Exchangeable GuernseyCo Shares on a pro rata basis.
The foregoing requires, among other things, the approval by
Andes Shareholders of the Interoil Demerger Resolution to be
proposed at the General Meeting and the confirmation of the
Reduction of Capital by the Court.
Following the Interoil Demerger becoming effective, the
Exchangeable GuernseyCo Shareholders will have six months in which
to redeem the Exchangeable GuernseyCo Shares into fully-paid
Interoil Shares on the basis of one Interoil Share for every 36
Exchangeable GuernseyCo Shares held (subject to adjustment). If an
Exchangeable GuernseyCo Shareholder does not exercise the right to
redeem during this period, then GuernseyCo will sell the Interoil
Shares as soon as reasonably practicable at the best price
reasonably obtainable and the net proceeds will be distributed to
the holders of the remaining Exchangeable GuernseyCo Shares on a
pro rata basis in accordance with the articles of association of
GuernseyCo.
US Andes Shareholders and Other US Andes Shareholders will
neither participate in the Interoil Demerger, nor receive
Exchangeable GuernseyCo Shares. There will be no public offer of
the Exchangeable GuernseyCo Shares or Interoil Shares in the United
States.
The US Andes Shareholders have agreed to waive their rights to
participate in the Interoil Demerger and to receive any
Exchangeable GuernseyCo Shares, and agreed not to vote on
Resolution 4 at the General Meeting. In return for this waiver they
will receive such number of Interoil Shares that they would have
been entitled to receive had they been permitted to receive
Exchangeable GuernseyCo Shares pursuant to the terms of the
Interoil Demerger. It is proposed that these Interoil Shares be
transferred to the US Andes Shareholders prior to completion of the
Interoil Demerger. As these US Andes Shareholders will be receiving
Interoil Shares for nil consideration, Resolution 4 seeks the
approval of the Andes Shareholders (excluding the US Andes
Shareholders) in respect of the proposed transfer.
The Company is not aware of any Other US Andes Shareholders as
at the Latest Practicable Date. If the Company becomes aware of any
Other US Andes Shareholders prior to the Interoil Demerger Record
Time then the Company will discuss alternative arrangements with
the Other US Andes Shareholders to take account of their
non-participation in the Interoil Demerger.
It should be noted that, although it is currently the Company's
intention that the Interoil Demerger should be completed, the
Company is entitled to terminate the Interoil Demerger Agreement at
any time prior to the General Meeting. If the Interoil Demerger
does not complete, the percentage interest of the Andes
Shareholders (excluding the Mercuria Group) in the voting rights of
the Company will be less than would have been the case if the ratio
under the Share Purchase Agreement had been calculated on the basis
that the Interoil Demerger had not occurred. If the Interoil
Demerger is not approved, or if the Interoil Demerger does not
proceed for any reason, no Interoil Shares will be transferred to
the US Andes Shareholders.
In connection with the Interoil Demerger, the Directors
recommend that Andes Shareholders (excluding the US Andes
Shareholders) approve Resolution 4 at the General Meeting approving
the Interoil Demerger arrangements including the transfer of
513,598 Interoil Shares by the Company to the US Andes Shareholders
for nil consideration. If Resolution 4 is not approved at the
General Meeting, then Andes will not proceed with the Interoil
Demerger.
The Exchangeable GuernseyCo Shares and the Interoil Shares have
not been and will not be registered under the Securities Act or
under the securities laws of any state or other jurisdiction of the
United States and may not be offered or sold in or into the United
States except pursuant to an applicable exemption from, or in a
transaction not subject to, the registration requirements of the
Securities Act and in compliance with any applicable securities
laws of any state or other jurisdiction of the United States. There
will be no public offer of the Exchangeable GuernseyCo Shares in
the United States. US Andes Shareholders and Other US Andes
Shareholders will not receive Exchangeable GuernseyCo Shares. The
Exchangeable GuernseyCo Shares and Interoil Shares have not been
approved or disapproved by the US Securities Exchange Commission,
any state securities commission in the United States or any US
regulatory authority, nor have any of the foregoing authorities
passed upon or endorsed the merits of the distribution of the
Exchangeable GuernseyCo Shares or the Interoil Shares or the
accuracy or adequacy of the Admission Document. Any representation
to the contrary is a criminal offence in the United States.
Further details of the Interoil Demerger are set out in Part 5
of the Admission Document. Andes Shareholders should also read the
risk factors under the heading "Risks relating to the Interoil
Demerger" in Part 6 of the Admission Document and the tax
implications for Andes Shareholders who are tax resident in the UK
in paragraph 12.3 of Part 10 of the Admission Document.
22. RELATED PARTY TRANSACTION
The Company has entered into the Transaction Fee Services
Agreement with Integra and certain
of its subsidiaries have entered into the Services Agreement
with Integra. Intergra is the parent company of Integra Capital USA
LLC, which, together with the interests of José Luis Manzano and
Vetalir International S.A. (established as a trust, the
beneficiaries of which are the family of José Luis Manzano), is
interested in 104,289,545 Ordinary Shares, representing
approximately 17.2 per cent. of the Existing Share Capital.
The Transaction Fee Services Agreement relates to M&A
advisory services provided to the Company by Integra in relation to
the Transaction. Under the terms of this agreement, Integra has
assisted with sourcing the proposed Transaction and negotiating its
terms. In consideration for these services, Integra will
receive:
-- a cash payment of GBP4,164,440 to be made in three equal
instalments on the fifth day after Completion, 31 October 2017 and
31 January 2018; and
-- a cash payment of GBP4,164,440 to be paid six months
following Admission. The Company has the option to either settle
this in cash or apply this amount in satisfaction for the issue of
new Ordinary Shares at an issue price of the lower of (i) the
volume weighted average share price per Ordinary Share for the
period of 90 days after Admission and (ii) 68 pence, subject to a
floor price of 33.5 pence per share.
The Services Agreement relates to ongoing services to be
provided by Integra to Andes Energia Argentina S.A., Kilwer and
Ketsal. Under the terms of this agreement, Integra will advise on
various matters relating to the Enlarged Group's business,
including analysing business opportunities, developing business
strategies and improving financial performance and receive a
monthly fee of US$15,000.
Further details of the Transaction Fee Services Agreement and
Services Agreement are set out in paragraphs 13.1(i) and 13.1(j) in
Part 10 of the Admission Document.
The entry into the Transaction Fee Services Agreement and the
Services Agreement are considered to constitute related party
transactions for the purpose of Rule 13 of the AIM Rules for
Companies.
The Independent Directors consider, having consulted with
Stockdale, that the terms of the Transaction Fee Services Agreement
and the Services Agreement are fair and reasonable insofar as Andes
Shareholders are concerned.
23. INDEPENT DIRECTORS' VIEW ON THE VALUE OF THE ORDINARY SHARES
After taking independent advice, the Independent Directors have
estimated that the value of the Ordinary Shares (excluding the
value of the Interoil Shares and not taking into account the number
of the Share Exchange Shares to be issued) is equal to 33.5 pence
per Ordinary Share.
The Consideration Shares will represent 75.38 per cent. of the
Enlarged Share Capital.
The respective contributions of the Andes Group and the THBV
Group, to the Enlarged Group are set out in the table below:
Percentage contribution Andes Group (%) THBV Group
(%)
2016 EBITDA 18 82
2016 Production 22 78
2P Reserves 26 74
24. RISK FACTORS
Prior to making an investment decision in relation to the
Ordinary Shares, Andes Shareholders and prospective investors
should read the whole of the Admission Document and in particular
carefully consider the section entitled "Risk Factors" in Part 6 of
the Admission Document.
25. TAXATION
The attention of Andes Shareholders is drawn to the further
information regarding taxation set out in paragraph 12 of Part 10
of the Admission Document. These details are, however, intended
only as a general guide to the current tax position under UK
taxation law and if Andes Shareholders and prospective investors
are in any doubt as to their tax position, they should seek
independent advice.
26. FURTHER INFORMATION
Andes Shareholders should read the whole of the Admission
Document, which provides additional information on the Enlarged
Group, the Concert Party, the Interoil Demerger and the Proposals,
and should not rely on summaries of, or individual parts only of,
the Admission Document. Your attention is drawn, in particular, to
Parts 2 to 11 of the Admission Document.
27. ADMISSION, SETTLEMENT, DEALINGS AND CREST
Application will be made for the Enlarged Share Capital to be
admitted to trading on AIM, conditional on Completion. If the
Resolutions are passed at the General Meeting, it is expected that
Admission will become effective and dealings in the Enlarged Share
Capital will commence on 10 August 2017. These dates and times may
change.
CREST is a paperless settlement system enabling securities to be
evidenced otherwise than by a certificate and transferred otherwise
than by written instrument in accordance with the CREST
Regulations. The Ordinary Shares are already admitted to CREST and
will continue to be so following Admission. Accordingly, settlement
of transactions in Ordinary Shares held in uncertificated form
following Admission will take place within the CREST system.
CREST is a voluntary system and holders of Ordinary Shares who
wish to receive and retain share
certificates will be able to do so.
28. GENERAL MEETING
Set out at the end of the Admission Document is a notice
convening a General Meeting to be held at the offices of CMS
Cameron McKenna Nabarro Olswang LLP, at Cannon Place, 78 Cannon
Street, London EC4N 6AF at 10.00 a.m. on 9 August 2017 at which the
following Resolutions will be proposed:
-- Resolution 1 (the Waiver Resolution): an ordinary resolution
to approve the Waiver. The Waiver Resolution must be approved by
the Independent Shareholders by way of a poll.
-- Resolution 2 (a Transaction Resolution): subject to the
passing of Resolutions 1 and 3, an ordinary resolution to:
a) approve the Transaction for the purposes of Rule 14 of the AIM Rules for Companies;
b) authorise the Directors to allot the Consideration Shares,
the Deferred Consideration Shares, the Integra Shares, the Mercuria
Warrants and the Settled Claim Shares to the extent necessary;
c) authorise the Directors to allot further Ordinary Shares
following Admission, representing up to approximately one-third of
the Enlarged Share Capital plus an additional one-third to be used
in relation to a rights issue;
d) approve the rules of the DBP; and
e) authorise any steps which may be taken from time to time by
the directors of the Company (acting reasonably and subject to
relevant statutory directors' duties) in relation to the Company
enforcing its rights under the Relationship Agreement.
-- Resolution 3 (a Transaction Resolution): subject to the
passing of Resolutions 1 and 2, a special resolution to:
a) dis-apply statutory pre-emption rights in relation to the
allotment of (i) the Integra Shares and (ii) further Ordinary
Shares, representing approximately 20 per cent. of the Enlarged
Share Capital;
b) change the name of the Company to Phoenix Global Resources plc; and
c) amend the Company's articles by (i) amending article 88 of
the Articles to increase the limit on directors' fees from
GBP100,000 to GBP750,000 per annum; and (ii) deleting article 165
of the Articles which relates to provisions on the City Code.
-- Resolution 4 (the Interoil Demerger Resolution): subject to
the passing of Resolutions 1, 2 and 3, a special resolution to
approve:
a) the reduction of the share premium account of the Company by
GBP60,000,000 and a distribution in specie on the Ordinary Shares,
equal to the aggregate book value of the Interoil Shares to be
demerged, such distribution to be satisfied by the transfer of the
Interoil Shares to GuernseyCo in consideration for the issue of one
Exchangeable GuernseyCo Share for every one Ordinary Share held to
the Andes Shareholders (excluding the US Andes Shareholders)
recorded on the Andes Share Register at the Interoil Demerger
Record Time;
b) the transfer of 513,598 Interoil Shares by the Company to the
US Andes Shareholders for nil consideration; and
-- Resolution 5: subject to the passing of Resolutions 1, 2 and
3 and Admission, an ordinary resolution to approve the rules of the
LTIP.
If any of Resolutions 1, 2 and 3 are not passed, the Transaction
will not proceed and the Enlarged Group will not be formed. If
Resolution 4 is not passed the Interoil Demerger will not proceed
and Resolution 4 is conditional on Resolutions 1, 2 and 3 being
passed.
To be passed:
-- the Waiver Resolution requires a simple majority of
Independent Shareholders voting in person or by proxy to vote in
favour by way of a poll;
-- Resolution 2 requires a simple majority of Andes Shareholders
voting in person or by proxy to vote in favour;
-- Resolution 3 requires a majority of not less than 75 per
cent. of Andes Shareholders voting in person or by proxy to vote in
favour;
-- the Interoil Demerger Resolution requires a majority of not
less than 75 per cent. of Andes Shareholders (excluding the US
Andes Shareholders) voting in person or by proxy in favour; and
-- Resolution 5 requires a simple majority of Andes Shareholders
voting in person or by proxy to vote in favour.
29. IRREVOCABLE UNDERTAKING TO VOTE IN FAVOUR OF THE RESOLUTIONS
(OTHER THAN THE WAIVER RESOLUTION)
Mercuria EAM has given an irrevocable undertaking to the Company
to vote in favour of the Resolutions (other than the Waiver
Resolution) (or, where relevant, to procure that such action is
taken by the relevant registered holders of its existing Ordinary
Shares) in respect of its holding totalling, in aggregate,
49,421,639 Existing Ordinary Shares, representing approximately
8.16 per cent. of the Existing Share Capital.
30. ACTION TO BE TAKEN BY ANDES SHAREHOLDERS
Andes Shareholders will find enclosed with the Admission
Document a Form of Proxy to enable them to vote at the General
Meeting. Whether or not Andes Shareholders intend to be present at
the General Meeting, they are requested to complete and return the
Form of Proxy in accordance with the instructions printed thereon
to Share Registrars Limited, The Courtyard, 17 West Street,
Farnham, Surrey GU9 7DR so as to arrive no later than 10.00 a.m. on
7 August 2017.
Completion and return of the Form of Proxy will not affect Andes
Shareholders' rights to attend and vote at the meeting, if they so
wish.
Following the publication of the Admission Document, the Company
will notify Andes Shareholders resident in Argentina of the
procedure to participate at the General Meeting through notices to
be published on the Argentine Securities Commission website and on
the Buenos Aires Stock Exchange Bulletin.
If you are in any doubt as to the action you should take, you
are recommended to seek your own personal financial advice
immediately from your own stockbroker, bank manager, solicitor,
accountant, fund manager or other independent financial adviser
authorised under FSMA if you are in the United Kingdom, or, if you
are not, from another appropriately authorised independent
financial adviser.
31. RECOMMATION
The Independent Directors and Nicolas Mallo Huergo, who have
been so advised by Stockdale, consider the Waiver to be fair and
reasonable and in the best interests of the Independent
Shareholders and the Company as a whole. In providing this
financial advice to the Independent Directors and Nicolas Mallo
Huergo, Stockdale has relied upon the commercial assessment of the
Directors (other than Matthieu Milandri).
The Independent Directors, who have been so advised by
Stockdale, consider the Transaction to be fair and reasonable and
in the best interests of the Independent Shareholders and the
Company as a whole. In providing this financial advice to the
Independent Directors, Stockdale has relied upon the commercial
assessment of the Directors (other than Matthieu Milandri).
Accordingly, the Independent Directors and Nicolas Mallo Huergo
recommend that Independent Shareholders vote in favour of the
Waiver Resolution and the Independent Directors recommend that all
Andes Shareholders vote in favour of the Transaction
Resolutions.
Matthieu Milandri has not taken part in the consideration of the
Waiver Resolution by the Independent Directors and Nicolas Mallo
Huergo. Both Matthieu Milandri and Nicolas Mallo Huergo have not
taken part in the consideration of the Transaction Resolutions by
the Independent Directors. This is because (i) Matthieu is an
employee of Mercuria Energy Trading which is a subsidiary of
Mercuria EG, which is a member of the Concert Party, and (ii)
Nicolas is a director of Integra, which is the beneficiary of the
fee payable under the Transaction Fee Services Agreement.
In addition, all Directors recommend that all Andes Shareholders
vote in favour of the Interoil Demerger Resolution (other than the
US Andes Shareholders) and Resolution 5 (approval of the LTIP).
The Independent Directors who own Ordinary Shares intend to vote
in favour of the each of the Resolutions to be proposed at the
General Meeting in respect of their own beneficial holdings,
comprising 3,560,324 Ordinary Shares in aggregate, representing
approximately 0.59 per cent. of the Existing Share Capital.
In addition, Nicolas Mallo Huergo intends to vote in favour of
each of the Resolutions (other than the Waiver Resolution) in
respect of his beneficial holding, comprising 863,323 Ordinary
Shares, representing approximately 0.14 per cent. of the Existing
Share Capital.
Yours faithfully,
Sir Michael Rake
Non-Executive Director
(1) Source: Argentine Ministry of Energy and Mines
(2) All production figures in this paragraph are sourced from
the Argentine Ministry of Energy and Mines
In accordance with Schedule Four (g) of the AIM Rules, below is
an extract from the Admission Document setting out details of the
service contracts of the Proposed Directors:
Proposed Directors
Details of titles and dates of appointment of the Proposed
Directors are set out below:
Name Title/function Date of appointment
-------------------- ---------------- --------------------
Anuj Sharma Chief Executive Admission
Officer
-------------------- ---------------- --------------------
Philip Wolfe Chief Financial Admission
Officer
-------------------- ---------------- --------------------
Guillaume Vermersch Non-Executive Admission
Director
-------------------- ---------------- --------------------
Garrett Soden Non-Executive Admission
Director
-------------------- ---------------- --------------------
John Bentley Non-Executive Admission
Director
-------------------- ---------------- --------------------
The Proposed Directors have entered into the following service
agreements and appointment letters with the Company, conditional on
Admission:
(a) On 24 July 2017, Anuj Sharma entered into a service
agreement with the Company, conditional on Admission. Mr Sharma is
entitled to a base salary of US$620,000, which is subject to annual
review plus a payment of another further 10 per cent. of Mr
Sharma's base salary into a 401(k) scheme for Mr Sharma (or a
payment of cash in lieu). The agreement is conditional on
Admission. The agreement is terminable on not less than twelve
months' prior written notice, save in the event the Company serves
an immediate termination notice, in specified circumstances of
constructive dismissal, where Mr Sharma can terminate the
employment with immediate effect and receive pay in lieu of base
salary for this twelve month notice period. Save with the consent
of the Company, Mr Sharma is during the continuance of his
employment, prohibited from being employed, engaged by, or holding
an office with, any other business (although the Board shall not
unreasonably withhold its consent to a non-executive,
non-competitive director appointment from 1 January 2019). In
addition, Mr Sharma is eligible to participate in any discretionary
bonus scheme or long term incentive arrangements operated by the
Company for senior executives. The agreement further permits Mr
Sharma to participate in all employee benefit plans put in place or
operated for the benefit of employees in the United States and that
the Company shall put in place as soon as reasonably practicable
after Admission, medical and dental insurance for the Executive and
his dependent family. He is entitled to 25 days' annual vacation
leave, plus public holidays. The agreement also contains: (i) six
month post termination restrictive covenants against competing with
the Company in the defined restricted areas and (ii) 12 month post
termination restrictive covenant against soliciting key employees
and/or customers or clients. Mr Sharma will be based in Houston,
Texas.
(b) On 24 July 2017, Philip Wolfe entered into a service
agreement with the Company, conditional on Admission. Mr Wolfe is
entitled to a base salary of GBP300,000, which is subject to annual
review plus an allowance of 10 per cent. of base salary in lieu of
pension. Mr Wolfe is entitled to a one off sign-on bonus of
GBP40,000 on Admission in recognition of the support and
significant time commitment he has provided without remuneration in
the lead-up to Admission. The agreement is conditional on
Admission. The agreement is terminable on not less than twelve
months' prior written notice, save in the event the Company serves
an immediate termination notice in specified circumstances. The
agreement contains provisions entitling the Company to pay Mr Wolfe
in lieu of some or all his notice period on termination to the
value of his basic salary at the time of termination. Save with the
consent of the Company, Mr Wolfe is during the continuance of his
employment, prohibited from being employed or engaged by or holding
any office with, any other business (although the Board shall not
unreasonably withhold its consent to a non-competitive,
non-executive appointment from 1 January 2019). In addition, Mr
Wolfe is eligible to participate in any discretionary bonus scheme
or long term incentive arrangements operated by the Company for
senior executives. Mr Wolfe is also entitled to participate in any
private medical insurance, life assurance, permanent health
insurance schemes operated by the Company from time to time in the
United Kingdom (or for payment of the equivalent amount of the cost
of providing the life assurance scheme in respect of Mr Wolfe to Mr
Wolfe's private life assurance scheme provider). He is entitled to
25 days' annual leave, plus public holidays. The agreement also
contains: (i) 6 month post termination restrictive covenants
against competing with the Company and against soliciting key
employees and/or customers or clients in defined restricted areas.
Mr Wolfe will be based in London, England.
(c) On 24 July 2017, Guillaume Vermersch, Garrett Soden and John
Bentley, each entered into a letter of appointment with the
Company, conditional on Admission. Each of them is entitled to an
annual fee of GBP50,000. Garrett Soden and John Bentley are each
entitled an additional fee of GBP10,000 per year for chairing the
Audit and Risk Committee and Remuneration Committee respectively.
Each non-executive director is expected to attend a minimum of
eight board meetings per year, and devote at least four full days
per month to the Company. Each letter is terminable on one months'
prior written notice (and the appointment shall terminate forthwith
if the director is removed from office pursuant to the Articles or
law, or is not re-elected (with letters requiring the Director to
stand for annual re-election). There are restrictions on the
engagement with, or having any financial interests in any company
that operates in competition (directly or indirectly) with the
business of the Company, without prior written approval (although
the Directors are not prevented from holding not more than 5 per
cent. Of shares in a listed company which does not carry on a
business similar to or competitive with any business of the
Company). The letters anticipate a minimum of eight board meetings
per year and a time commitment of at least four full days per
month. The role and duty of each non-executive director is in line
with Part 10 of the Companies Act.
Going forward, the Proposed Directors intend to have their
appointments approved annually at the Company's annual general
meeting.
All the Proposed Directors since a short period prior to the
publication of this document have been covered by the Company's
directors' and officers' liability insurance from the date of their
appointment and which will also cover preparatory work in advance
of Admission and are entitled to be reimbursed for reasonable
expenses incurred in carrying out their duties.
All Proposed Directors must also comply with the requirements
relating to conflicts of interests in the Companies Act and other
applicable rules.
GLOSSARY OF TECHNICAL TERMS
The following definitions apply throughout this document unless
the context requires otherwise:
"2P reserves" proven and probable reserves
-------------------- -------------------------------
"2C resources" contingent resources
with best estimate scenario
-------------------- -------------------------------
"3C resources" contingent resources
with high estimate scenario
-------------------- -------------------------------
"bbls" barrels
-------------------- -------------------------------
"bbls/day" or "bpd" barrels of oil per day
-------------------- -------------------------------
"boe" barrel of oil equivalent
-------------------- -------------------------------
"boepd" barrels of oil equivalent
per day
-------------------- -------------------------------
"MMbtu" or "MMBTU" million British thermal
units
-------------------- -------------------------------
"Net Entitlement" the production that the
contractor or concession
holder is entitled to
physically receive. In
a concession, this equates
to concessionaire's working
interest production excluding
any royalty payments
-------------------- -------------------------------
DEFINITIONS
The following definitions apply throughout this document unless
the context requires otherwise:
"2016 Annual the annual report and accounts
Report" of the Andes Group for the financial
year ended 31 December 2016
------------------------- ---------------------------------------------
"2015 Annual the annual report and accounts
Report" of the Andes Group for the financial
year ended 31 December 2015
------------------------- ---------------------------------------------
"2014 Annual the annual report and accounts
Report" of the Andes Group for the financial
year ended 31 December 2014
------------------------- ---------------------------------------------
"acting in concert" has the meaning given to it in
the City Code
------------------------- ---------------------------------------------
"Admission" admission of the Enlarged Share
Capital of the Company to trading
on AIM becoming effective in accordance
with the AIM Rules
------------------------- ---------------------------------------------
"AIM" AIM, a market of the London Stock
Exchange
------------------------- ---------------------------------------------
"AIM Rules" the AIM Rules for Companies and
the AIM Rules for Nominated Advisers,
as applicable
------------------------- ---------------------------------------------
"AIM Rules for the rules for AIM companies published
Companies" by the London Stock Exchange,
as amended or re-issued from time
to time
------------------------- ---------------------------------------------
"Andes Group" the Company and its subsidiaries
as at the date of the Admission
Document
------------------------- ---------------------------------------------
Andes Interoil Andes Interoil Limited, a wholly-owned
subsidiary of Andes, being a company
incorporated in England and Wales
with registered number 09659955
------------------------- ---------------------------------------------
"Andes Shareholders" holders of the Ordinary Shares
in issue immediately prior to
Admission
------------------------- ---------------------------------------------
"Articles" the articles of association of
the Company, a summary of certain
provisions of which is set out
in paragraph 6 of Part 10 of the
Admission Document
------------------------- ---------------------------------------------
"Board" the board of directors of the
Company as constituted from time
to time
------------------------- ---------------------------------------------
"Bridging and the bridging and working capital
Working Capital facilities agreement dated 24
Facilities Agreement" July 2017 entered into between
the Company and Mercuria Energy
Trading, further details of which
are set out in paragraph 13.1(g)
of Part 10 of the Admission Document
------------------------- ---------------------------------------------
"Business Day" a day (other than Saturday or
Sunday) on which banks are generally
open for business in London
------------------------- ---------------------------------------------
"Canacol" Canacol Energy Ltd, a company
incorporated in Bolivia with registered
number 2011382880
------------------------- ---------------------------------------------
"certificated" the description of a share or
or "in certificated other security which is not in
form" uncertificated form (that is,
not in CREST)
------------------------- ---------------------------------------------
"City Code" the City Code on Takeovers and
Mergers in the United Kingdom
------------------------- ---------------------------------------------
"Closing Price" the middle market price of an
Ordinary Share at the close of
business on the day to which such
price relates, as derived from
the AIM Appendix of the Daily
Official List of the London Stock
Exchange for that day
------------------------- ---------------------------------------------
"Companies Act" the Companies Act 2006, as amended
or "Act"
------------------------- ---------------------------------------------
"Company" or Andes Energia plc, a company incorporated
"Andes" in England and Wales with registration
number 05083946
------------------------- ---------------------------------------------
"Completion" completion of the Transaction
------------------------- ---------------------------------------------
"Concert Party" the Mercuria Group (including
Upstream Capital) and the shareholders
of Mercuria EGH. Further details
of which are set out in paragraph
2 of Part 9 of the Admission Document
------------------------- ---------------------------------------------
"Consideration the 1,899,106,385 Ordinary Shares
Shares" to be issued to Upstream Capital
on Completion
------------------------- ---------------------------------------------
"Convertible the convertible loan agreement
Loan Agreement" dated 31 May 2013 between the
Company and Mercuria EAM, as more
particularly described in paragraph
13.1(r) of Part 10 of the Admission
Document
------------------------- ---------------------------------------------
"Corporate Governance the UK Corporate Governance Code,
Code" published by the Financial Reporting
Council
------------------------- ---------------------------------------------
"CREST" the computerised settlement system,
facilitating the paperless settlement
of trades and the holding of uncertificated
shares administered by Euroclear
UK & Ireland Limited, the operator
of CREST
------------------------- ---------------------------------------------
"CREST Regulations" the Uncertificated Securities
Regulations 2001 of the UK (SI
2001/3755)
------------------------- ---------------------------------------------
"Court" the High Court of Justice of England
and Wales
------------------------- ---------------------------------------------
"DBP" the Andes Energia Deferred Bonus
Plan details of which are set
out in paragraph 10.3 of Part
10 of the Admission Document
------------------------- ---------------------------------------------
"Deferred Consideration the new Ordinary Shares to be
Shares" issued to Upstream Capital under
the terms of the Share Purchase
Agreement in the event that the
Integra Shares are issued, as
more particularly described in
paragraph 13.1(i) of Part 10 of
the Admission Document
------------------------- ---------------------------------------------
"Directors" the current directors of the Company,
whose names are set out on page
5 of the Admission Document
------------------------- ---------------------------------------------
"E&P" exploration and production
------------------------- ---------------------------------------------
"EBITDA" earnings before interest, tax
depreciation and amortisation
------------------------- ---------------------------------------------
"Enlarged Group" Andes and its subsidiaries following
Completion
------------------------- ---------------------------------------------
"Enlarged Group the Board as it will be constituted
Board" on Completion
------------------------- ---------------------------------------------
"Enlarged Share the enlarged share capital of
Capital" the Company upon Admission, comprising
the Existing Ordinary Shares,
the Consideration Shares and the
Share Exchange Shares
------------------------- ---------------------------------------------
"EU" European Union
------------------------- ---------------------------------------------
"Exchangeable a holder of the Exchangeable GuernseyCo
GuernseyCo Shareholder" Shares
------------------------- ---------------------------------------------
"Exchangeable exchangeable redeemable shares
GuernseyCo Shares" of no par value in the share capital
of GuernseyCo
------------------------- ---------------------------------------------
"Existing Ordinary the Ordinary Shares in issue as
Shares" at the date of the Admission Document
------------------------- ---------------------------------------------
"Existing Share the issued share capital as at
Capital" the date of the Admission Document
------------------------- ---------------------------------------------
"Existing Warrants" the existing warrants over Ordinary
Shares granted under the Existing
Warrant Instruments
------------------------- ---------------------------------------------
"FCA" the United Kingdom Financial Conduct
Authority
------------------------- ---------------------------------------------
"Form of Proxy" the form of proxy to be used at
the General Meeting and enclosed
with the Admission Document
------------------------- ---------------------------------------------
"FSMA" the UK Financial Services and
Markets Act 2000 (as amended)
including any regulations made
pursuant thereto
------------------------- ---------------------------------------------
"General Meeting" the general meeting of the Company
to be held on 9 August 2017 (and
any adjournment thereof) for the
purposes of considering the Resolutions,
notice of which is set out at
the end of the Admission Document
------------------------- ---------------------------------------------
"GLACCO" GLACCO Compania Petrolera S.A.,
a company incorporated in Argentina
with registered number 9418, Book
98 of National Stock Corporations'
Bylaws, dated 30 December 1982
------------------------- ---------------------------------------------
"GuernseyCo" IOX Investments Limited, a company
incorporated in Guernsey with
registered number 63781
------------------------- ---------------------------------------------
"IFRS" International Financial Reporting
Standards
------------------------- ---------------------------------------------
"Independent the Directors, other than Matthieu
Directors" or Milandri and Nicolas Mallo Huergo
"Independent
Board"
------------------------- ---------------------------------------------
"Independent the non-executive directors of
Non-Executive the Company who are deemed independent
Directors" for the purposes of the Corporate
Governance Code
------------------------- ---------------------------------------------
"Independent the Andes Shareholders save for
Shareholders" Mercuria EAM and the Integra Shareholders
------------------------- ---------------------------------------------
"Integra" Integra Capital S.A., a company
incorporated in Argentina with
registered number 15071 and registered
office at Maipu1252, Piso 2, Buenos
Aires, CP1006
------------------------- ---------------------------------------------
"Integra Shareholders" (i) José Luis Manzano, (ii)
Nicolas Mallo Huergo, being a
director of Integra, (iii) Integra
Capital USA LLC being a subsidiary
of Integra and (iv) Vetalir International
S.A., being a family trust of
Jose Luis Manzano of which he
is not a beneficiary, all being
Andes Shareholders who are connected
to Integra, the beneficiary of
the fee payable under the Transaction
Fee Services Agreement
------------------------- ---------------------------------------------
"Integra Shares" the new Ordinary Shares to be
issued at the Company's election
to Integra pursuant to and subject
to the terms of the Transaction
Fee Services Agreement, comprising
a minimum of 7,410,254 and a maximum
amount of 5,041,709 Ordinary Shares
------------------------- ---------------------------------------------
"Interoil" Interoil Exploration and Production
ASA, a company incorporated in
Norway with registered number
988247006
------------------------- ---------------------------------------------
"Interoil Demerger" the proposed demerger of the
Interoil Shares from the Andes
Group to be effected by way of
the Reduction of Capital and an
indirect distribution in specie
on the terms and subject to the
conditions set out in the Interoil
Demerger Agreement as described
in the Admission Document
------------------------- ---------------------------------------------
"Interoil Demerger the agreement relating to the
Agreement" Interoil Demerger entered into
between the Company and GuernseyCo
on 24 July 2017, as more particularly
described in paragraph 13.1(h)
of Part 10 of the Admission Document
------------------------- ---------------------------------------------
"Interoil Demerger the special resolution numbered
Resolution" 4 set out in the Notice of General
Meeting
------------------------- ---------------------------------------------
"Interoil Shares" (i) prior to the Interoil Demerger
Effective Time, all of the
ordinary shares in the capital
of Interoil held by Andes Interoil
or Andes; and (ii) following the
Interoil Demerger Effective Time,
the ordinary shares in the capital
of Interoil held by GuernseyCo
------------------------- ---------------------------------------------
"Ketsal" Ketsal S.A., a company incorporated
in Argentina with resolution No
1107, dated 4 July 2005
------------------------- ---------------------------------------------
"Kilwer" Kilwer S.A., a company incorporated
in Argentina with Number 10005,
Book 110, Volume "A" of Stock
Corporations, dated 26 November
1991
------------------------- ---------------------------------------------
"Latest Practicable 20 July 2017, being the latest
Date" practicable date prior to the
publication of the Admission Document
------------------------- ---------------------------------------------
"London Stock London Stock Exchange plc
Exchange"
------------------------- ---------------------------------------------
"LTIP" the Andes Energia Long Term Incentive
Plan, details of which are set
out in paragraph 10.2 of Part
10 of the Admission Document or
following the Interoil Demerger
Effective Time, all of the ordinary
shares in the capital of Interoil
held by GuernseyCo or an Andes
Shareholder
------------------------- ---------------------------------------------
"Mercuria EAM" Mercuria Energy Asset Management
B.V., a company registered in
the Netherlands with registration
number 30240949 and holder of
49,421,639 Existing Ordinary Shares
at the date of the Admission Document
------------------------- ---------------------------------------------
"Mercuria EG" Mercuria Energy Group Limited,
a company registered in Cyprus
with registration number HE253486
------------------------- ---------------------------------------------
"Mercuria EGH" Mercuria Energy Group Holding
Limited, a company registered
in the British Virgin Islands
with registration number 1890203
which holds a 79.8 per cent. Economic
interest and 100 per cent. of
the voting rights in Mercuria
EG
------------------------- ---------------------------------------------
"Mercuria ESOP" the Mercuria Employee Stock Ownership
Programme
------------------------- ---------------------------------------------
"Mercuria Energy Mercuria Energy Trading S.A.,
Trading" a company registered in Switzerland
with registration number CHE-111.729.324
and a subsidiary of Mercuria EG
------------------------- ---------------------------------------------
"Mercuria Existing (i) the existing warrants to subscribe
Warrants" for 4,000,000 Ordinary Shares
held by Mercuria Asset Holdings
(Hong Kong) Limited, (ii) the
existing warrants to subscribe
for 3,000,000 Ordinary Shares
held by Mercuria Holdings (Cyprus)
Limited and (iii) the existing
warrants to subscribe for 1,463,325
Ordinary Shares held by Mercuria
EAM, as more particularly described
in paragraph 2.6 of Part 9 of
the Admission Document
------------------------- ---------------------------------------------
"Mercuria Group" Mercuria EG and its subsidiaries,
or "Mercuria" including, among others, Mercuria
EAM, Mercuria Energy Trading,
Upstream Capital but excluding
the THBV Group (pre-Admission)
and excluding the Enlarged Group
(following Admission)
------------------------- ---------------------------------------------
"Mercuria Warrants" the warrants to be issued at Completion
pursuant to the Mercuria Warrant
Instrument entitling the holder
to subscribe for up to 179,838,924
Ordinary Shares pursuant to the
Mercuria Warrant Instrument
------------------------- ---------------------------------------------
"Mercuria Warrant the warrant instrument to be entered
Instrument" into at Completion by the Company,
further details of which are set
out in paragraph 13.1(d) of Part
10 of the Admission Document
------------------------- ---------------------------------------------
"Minority Shareholders" Vetalir International S.A. (established
as a trust, the beneficiaries
of which are the family of José
Luis Manzano), Portstart Business
Corp, Prifen S.A. and Mirage Partners,
Inc.
------------------------- ---------------------------------------------
"New Board" the board of Directors of the
Company on Admission
------------------------- ---------------------------------------------
"New Employee the LTIP and the DBP
Share Plans"
------------------------- ---------------------------------------------
"Nominated Adviser" Stockdale Securities Limited,
or "Stockdale" the Company's nominated adviser
and broker
------------------------- ---------------------------------------------
"Notice" the notice convening the General
Meeting set out at the end of
the Admission Document
------------------------- ---------------------------------------------
"Official List" the Official List of the UK Listing
Authority
------------------------- ---------------------------------------------
"Ordinary Shares" Ordinary Shares in the share capital
of the Company each with a par
value of 10 pence
------------------------- ---------------------------------------------
"Other US Andes Andes Shareholders with registered
Shareholders" addresses in the United States
or who are located or resident
in the United States other than
the US Andes Shareholders
------------------------- ---------------------------------------------
"Overseas Andes Andes Shareholders who are not
Shareholders" resident in the UK
------------------------- ---------------------------------------------
"Panmure" Panmure Gordon (UK) Limited, the
Company's joint brokers
------------------------- ---------------------------------------------
"peso" or "AR$" Argentine peso, the lawful currency
of Argentina
------------------------- ---------------------------------------------
"PETSA" means Petrolera El Trébol
S.A., a company registered in
Argentina with company number
8094, Book 50, Stock
Corporations, dated 9 June 1999
the registered office of
which is Suipacha IIII, 18th Floor,
Buenos Aires, Argentina
------------------------- ---------------------------------------------
"PETSA Reserves the competent person report prepared
CPR" by Gaffney, Cline & Associates
in respect of PETSA's conventional
oil and gas reserves, as set out
in Section A of Part 7 of the
Admission Document
------------------------- ---------------------------------------------
"PETSA Resources the competent person report prepared
CPR" by W.D. Von Gonten &
Co. in respect of PETSA's unconventional
oil and gas
resources, as set out in Section
B of Part 7 of the Admission Document
------------------------- ---------------------------------------------
"PETSA Group" PETSA and its subsidiaries from
time to time
------------------------- ---------------------------------------------
"Premium Listing" an inclusion on the premium listing
segment of the Official List
of the FCA in relation to the
Ordinary Shares
------------------------- ---------------------------------------------
"Proposals" the proposals set out in the Admission
Document, including the
Transaction, the Reduction of
Capital, the Interoil Demerger,
the LTIP, the DBP, the amendments
to the Articles, the
change of the Company's name and
Admission
------------------------- ---------------------------------------------
"Proposed Directors" the proposed directors of the
Company, who will be appointed
to the Board of the Company with
effect from Completion,
namely, Anuj Sharma, Philip Wolfe,
Guillaume Vermesch,
Garrett Soden and John Bentley
------------------------- ---------------------------------------------
"Reduction of the proposed reduction of the
Capital" Company's share premium
account by GBP60 million, as described
in the Admission Document
------------------------- ---------------------------------------------
"Registrar" Share Registrars Limited
------------------------- ---------------------------------------------
"Regulatory a service approved by the FCA
Information for the distribution to the
Service" public of regulatory announcements
and included within the
list maintained on the FCA's website
------------------------- ---------------------------------------------
"Relationship the relationship agreement dated
Agreement" 24 July 2017 entered into between
the Company, Upstream Capital,
Mercuria EAM and Mercuria EG,
further details of which are set
out in paragraph 13.1(c) of Part
10 of the Admission Document
------------------------- ---------------------------------------------
"Resolutions" the resolutions set out in the
Notice
------------------------- ---------------------------------------------
"Revolving Credit the US$72,984,647 million revolving
Facility" credit facility being made available
to the Company pursuant to the
Bridging and Working Capital Facilities
Agreement
------------------------- ---------------------------------------------
"Roch" Roch S.A. a company incorporated
in Argentina with registered number
2360, Book 107, Volume "A" of
Stock Corporations, dated 26 April
1990
------------------------- ---------------------------------------------
"Rule 9" Rule 9 of the City Code
------------------------- ---------------------------------------------
"Securities the United States Securities Act
Act" of 1933, as amended, and the rules
and regulations promulgated thereunder
------------------------- ---------------------------------------------
"Services Agreement" the services agreement dated 24
July 2017 entered into between
Integra Capital S.A. and Andes
Energia Argentina S.A., Kilwer
and Ketsal., further details of
which are set out in paragraph
13.1(j) of Part 10 of the Admission
Document
------------------------- ---------------------------------------------
"Settled Claim" an amount determined to be owed
by the Company to Upstream Capital
in relation to a warranty or indemnity
claim under the Share Purchase
Agreement or a claim under the
Tax Deed
------------------------- ---------------------------------------------
"Settled Claim the Ordinary Shares to be issued
Shares" to Upstream Capital under the
Share Purchase Agreement in respect
of a Settled Claim (if applicable)
------------------------- ---------------------------------------------
"Share Exchange the share exchange agreement dated
Agreement" 31 May 2013 entered into between
the Company and Mercuria EAM,
as more particularly described
in paragraph 13.1(p) of Part 10
of the Admission Document
------------------------- ---------------------------------------------
"Share Exchange the 14,766,666 new Ordinary Shares
Shares" to be allotted and issued to Mercuria
EAM pursuant to the Share Exchange
Termination Agreement
------------------------- ---------------------------------------------
"Share Exchange the share exchange termination
Termination agreement dated 24 July 2017 entered
Agreement" into between the Company and Mercuria
EAM, as more particularly described
in paragraph 13.1(e) of Part 10
of the Admission Document
------------------------- ---------------------------------------------
"Share Purchase the agreement dated 24 July 2017
Agreement" between the Company, Upstream
Capital and Mercuria EG in relation
to the Transaction, further details
of which are set out in paragraph
13.1(a) of Part 10 of the Admission
Document
------------------------- ---------------------------------------------
"Takeover Panel" the UK Panel on Takeovers and
or "Panel" Mergers
------------------------- ---------------------------------------------
"Tax Deed" the tax deed dated 24 July between
the Company, Upstream Capital
and Mercuria EG in connection
with the Sale and Purchase Agreement,
further details of which are set
out in paragraph 13.1(b) of Part
10 of this Document
------------------------- ---------------------------------------------
"Term Loan" means the US$87,015,353 million
term loan being made available
to the Company pursuant to the
Bridging and Working Capital Facilities
Agreement
------------------------- ---------------------------------------------
"Transaction" the Company's proposed combination
with Trefoil Holdings, further
details of which are set out in
paragraph 8 of Part 1 of this
Document
------------------------- ---------------------------------------------
"Transaction the transaction fee services agreement
Fee Services dated 24 July 2017 entered into
Agreement" between the Company and Integra,
further details of which are set
out in paragraph 13.1(i) of Part
10 of this Document
------------------------- ---------------------------------------------
"Transaction resolutions 2 and 3 to be proposed
Resolutions" at the General Meeting as
set out in the Notice of the General
Meeting
------------------------- ---------------------------------------------
"Trefoil Holdings Trefoil Holdings and its subsidiaries
B.V. Group" from time to time, including the
or "THBV Group" PETSA Group
------------------------- ---------------------------------------------
"TrustCo" Gentoo Trustees Limited, a company
incorporated in Guernsey with
registered number 53535
------------------------- ---------------------------------------------
"UK Listing the FCA acting in its capacity
Authority" as the competent authority for
the purposes of Part VI of FSMA
------------------------- ---------------------------------------------
"uncertificated" recorded on the relevant register
or of the share or security concerned
"uncertificated as being held in uncertificated
form" form in CREST and title to which
may be transferred by means of
CREST
------------------------- ---------------------------------------------
"United Kingdom" the United Kingdom of Great Britain
or "UK" and Northern Ireland
------------------------- ---------------------------------------------
"United States", the United States of America,
"United its territories and possessions,
States of America" any state of the United States
or "US" of America and the District of
Columbia
------------------------- ---------------------------------------------
"Upstream Capital" Upstream Capital Partners VI Limited,
a company incorporated in the
Netherlands with registration
number HE253486, being a wholly-owned
subsidiary of Mercuria EG
------------------------- ---------------------------------------------
"US Andes Shareholders" Andes Shareholders at the Latest
Practicable Date with registered
addresses in the US who satisfy
certain investor qualification
requirements
------------------------- ---------------------------------------------
"US$" or "US the US dollar, the lawful currency
dollar" from time to time of the
United States
------------------------- ---------------------------------------------
"Voting Rights" voting rights attaching to Ordinary
Shares which are generally
exercisable at meetings of shareholders
of the Company
------------------------- ---------------------------------------------
"Waiver" the waiver by the Panel of obligations
under Rule 9 of the City
Code described in paragraph 10
Part 1 of the Admission Document
------------------------- ---------------------------------------------
"Waiver Resolution" the first resolution set out in
the Notice
------------------------- ---------------------------------------------
"YPF" YPF S.A., a company incorporated
in Argentina with registered number
404, Book 108, Volume "A" of Stock
Corporations, dated 5 February
1991
------------------------- ---------------------------------------------
"GBP" or "Sterling" pounds sterling, the lawful currency
from time to time of the
United Kingdom
------------------------- ---------------------------------------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCPGUQCMUPMGPC
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July 24, 2017 09:00 ET (13:00 GMT)
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