TIDMFRI
RNS Number : 3072O
Frontier Resources International
08 February 2016
The following announcement replaces the announcement
"Conditional Subscription, Board Changes & Update" with RNS
number 2289O released at 10.35 on 5 February 2016. The reference in
the text of that previous announcement to "Mr Reynolds is also
non-executive Chairman of New World Oil & Gas Plc and a
non-executive director of Orogen Gold Plc" was incorrect and has
been replaced with "Mr Reynolds is also a non-executive director of
New World
Oil & Gas Plc and non-executive Chairman of Orogen Gold Plc". All other text remains the same.
For immediate release
8 February 2016
Frontier Resources International Plc
("Frontier" or the "Company")
Conditional Subscription
Board changes
Bonus Warrant issue
Corporate update
The Board of Frontier (AIM Ticker: FRI) announces that the
Company has today conditionally issued, though a direct
subscription, 4,750,000,000 new ordinary shares of 0.01p each (the
"Subscription Shares") with existing and new investors at a placing
price of 0.03p per Subscription Share (the "Subscription Price") to
raise GBP1,425,000 before expenses (the "Subscription"),
conditional on admission of the Subscription Shares to trading on
AIM ("Admission").
The proceeds of the Subscription will be used to provide working
capital for the Company and to support the investment in new
projects. The Board does not intend to provide any further capital
to the Company's existing oil exploration projects, the future of
which the Board intends to consider following completion of the
Subscription.
To support a new strategic direction for the Company, there are
a number of proposed changes to the Board. On completion, Adam
Reynolds will be appointed to the Board as Chairman of the Company
and Jack Keyes and John O'Donovan will both cease to be directors
with immediate effect.
Background
Over the last six months, the Company has had an urgent need to
arrange additional funding for its immediate working capital
requirements over and above the potential commitments in respect of
its exploration projects.
Volatility in global financial markets and the steep decline in
oil prices have created very challenging conditions for oil
companies at all stages of development, and not just junior
exploration companies like Frontier. This market background has
made it exceptionally difficult for the Company to progress any of
its farm-out discussions, as potential partners have deferred their
own plans to acquire exploration acreage with upside potential.
Accordingly, the Board has been unable to secure any farm-out
partner on credible terms for any of the Company's oil exploration
projects, despite continued efforts over the last year.
Furthermore, there has been no current investor support for an
equity issue to provide further sufficient funding for the
Company's oil exploration projects.
The Board does not believe that there is any immediate prospect
of a material improvement in market conditions in the oil sector or
investor sentiment and has therefore concluded that it should now
pursue alternative options for the future funding and development
of the Group, including the disposal of the Group's existing oil
exploration projects and the investment in new projects outside of
the oil sector. Against this background, the Board has therefore
today agreed the terms of the Subscription (as defined below) with
existing and new investors to support the future development of the
Group in a new sector. The funds raised from the Subscription will
not be used to support the Group's existing oil exploration
projects, an update on which is provided below.
To support a new strategic direction for the Company, there are
a number of proposed changes to the Board. On completion of the
Subscription, Adam Reynolds will be appointed as a director of the
Company with immediate effect as Chairman. Mr Reynolds has a track
record of implementing change strategies for companies and the
Board believe that his appointment will enable the Company to
develop in a new strategic direction to re-build shareholder
value.
Mr Reynolds is currently a director of several AIM-traded
companies: He is a non-executive director of EKF Diagnostics
Holdings plc (a point-of-care, central laboratory, and molecular
diagnostics company), Premaitha Health Plc (a company involved in
the development of prenatal screening devices) and Optibiotix
Health Plc (a life sciences business developing compounds to tackle
obesity, high cholesterol and diabetes). Mr Reynolds is also a
non-executive director of New World Oil & Gas Plc and
non-executive Chairman of Orogen Gold Plc. He is Chairman of
Autoclenz Group Limited and Reyco Limited. Further information on
Mr Reynolds as required by the AIM Rules is set out in Appendix I
below.
On completion of the Subscription, Jack Keyes and John O'Donovan
will both cease to be directors of Frontier with immediate effect,
and the Board would like to thank them both for their tireless
efforts to develop the oil exploration projects of the Company in
such challenging markets.
Subscription
The Company has today conditionally issued, though a direct
subscription, 4,750,000,000 new ordinary shares of 0.01p each (the
"Subscription Shares") with existing and new investors at a placing
price of 0.03p per Subscription Share (the "Subscription Price") to
raise GBP1,425,000 before expenses (the "Subscription"),
conditional on admission of the Subscription Shares to trading on
AIM ("Admission").
The Subscription Price is a 57.1 per cent. discount to the
closing mid-market price on 3 February 2016 of 0.07p per existing
ordinary share of 0.01p each ("Ordinary Shares") and values the
existing ordinary share capital at approximately GBP108,600. This
discount reflects the Company's current financial position, the
failure to secure a farm-in partner for the Company's oil
exploration projects and the poor prospects for raising alternative
funding. The Board believes that in the absence of the Subscription
there is a very high likelihood that the Company would be unable to
continue trading by virtue of its financial position. The
Subscription, together with the proposed changes to the Board and
development of a new strategy, provides an opportunity to recover
some value for the Company existing shareholders.
The Board has considered whether it would be practicable or cost
effective to enable existing shareholders in the Company to
participate in the proposed equity issue on a pre-emptive basis.
The Board is acutely aware of the impact of dilution of the
Subscription on shareholders as the Subscription Shares will
represent approximately 7.1 per cent. of the issued share capital
of the Company as enlarged by the Subscription (the "Enlarged
Ordinary Share Capital"). However, the Board believes that the
costs and requirements of an open offer or rights issue are such
that it is not practicable or cost effective and cannot be achieved
in the timeframe required.
In order to provide existing shareholders with some ability to
subscribe should they so choose on similar terms to the
Subscription, the Board proposes that, subject to the certain
regulatory considerations relating to marketing securities in
certain jurisdictions, to issue new warrants ("Warrants") to
existing shareholders on the record date ("Qualifying
Shareholders") on a pro rata basis of one Warrant for every one
Ordinary Share ("Qualifying Shares") held (the "Warrant Bonus
Issue"). The Board believes that the Warrant Bonus Issue should
partially alleviate the impact of dilution on Qualifying
Shareholders. Further terms of the proposed Warrant Bonus Issue are
set out below. Should the Warrant Bonus Issue not proceed, the
Board would have to re-consider following completion of the
Subscription whether a subsequent pre-emptive offering is then
practicable or feasible.
The proceeds of the Subscription will be used to provide working
capital for the Company and to support the investment in new
projects. The Board does not intend to provide any further capital
to the Company's existing oil exploration projects, an update of
which is provided below.
Director Subscription participation
Neil Herbert, a director of the Company, has subscribed
GBP100,000 for 333,333,333 Subscription Shares at the Subscription
Price. The subscription by Neil Herbert is a Related Party
transaction for the purposes of Rule 13 of the AIM Rules. The
independent directors, comprising the Board other than Neil Herbert
(the "Independent Directors"), having consulted with the Company's
nominated adviser, consider that the subscription by Neil Herbert
is fair and reasonable insofar as the Company's shareholders are
concerned. The Independent Directors have taken into account in
particular that Neil Herbert is subscribing on the same terms and
conditions as the other subscribers for the Subscription Shares
procured by the Company from unconnected parties.
Directors' interests
Following the issue of the Subscription Shares and the Warrants,
the Directors' interests and proposed Director's interests in the
Company will be as follows:
Director / Proposed Number % interests Number of
Director of Ordinary in the Enlarged Warrants
Shares Ordinary (Note 3)
Share Capital
--------------------- ------------- ----------------- -----------
Adam Reynolds
(Note 1) 173,333,333 3.39% Nil
Neil Herbert 358,007,904 7.0% 24,674,571
Barbara Spurrier
(Note 2) 5,756,118 0.11% 5,756,118
--------------------- ------------- ----------------- -----------
Notes:
1. Adam Reynolds is a proposed director of the Company with
effect from admission of the proposed Subscription Shares.
(MORE TO FOLLOW) Dow Jones Newswires
February 08, 2016 02:00 ET (07:00 GMT)
2. 4,285,714 Ordinary Shares are held and 4,285,714 Warrants
will be held by CFPro Limited, a company beneficially owned by
Barbara Spurrier. A further 7,000 Ordinary Shares included in
Barbara Spurrier's interest notified on 22 July 2015 are held by
her adult sons.
3. Assumes Bonus Warrant Issue proceeds.
Admission
The Subscription Shares will, on issue, rank pari passu with the
existing Ordinary Shares in issue and application will be made for
the Subscription Shares to be admitted to trading on AIM. Admission
and trading in the Subscription Shares on AIM is expected to
commence on or around 17 February 2016 ("Admission").
Further details of the proposed Warrant Bonus Issue
The record date for the Warrant Bonus Issue is 4.30pm on 15
February 2016. Accordingly, the Board proposes that the Warrants
will only be issued to the existing shareholders of the
Company.
Provided that the Warrant Bonus Issue proceeds, one Warrant
would be issued for every one Qualifying Share held by eligible
Shareholders on the record date of the Bonus Issue (subject to
certain regulatory restrictions referred to below). Based on the
current issued share capital of 361,999,056 Ordinary Shares, the
Company would therefore issue 361,999,056 Warrants. The Warrants
would represent approximately 7.1 per cent. of the Enlarged Issued
Share Capital prior to exercise.
The exercise price of the Warrants will be 0.03p per new
Ordinary Share, being the same as the Subscription Price.
The Warrants, which will be unlisted, will be exercisable on the
following three dates: 7 April 2016; 7 July 2016; and 7 October
2016 (the "Final Exercise Date"). If any of the Warrants remain
unexercised on the Final Exercise Date, they will expire.
The instrument constituting the Warrants is expected to contain
other provisions typically found in such instruments, including
those relating to the adjustment of the terms of the Warrants,
protections for holders of Warrants and the procedures for the
modification of the rights of the Warrants.
The Warrants will be subject to eligibility requirements on
issue. Such requirements are resultant from pre-existing securities
law restrictions applicable to certain jurisdictions such as the
United States of America. The Warrant Bonus Issue will not be
extended to, and the Warrants will not be issued to and may not
subsequently be exercisable by, Shareholders in a restricted
jurisdiction. Notwithstanding the above, the Company will reserve
the right to permit any Shareholder to take up Warrants under the
Warrant Bonus Issue if the Company, in its sole and absolute
discretion, is satisfied that the transaction in question is exempt
from, or not subject to, the applicable restrictive legislation or
regulations.
Qualifying Shareholders who are in any doubt about the
implications of the Bonus Issue on their personal tax position
should consult their professional adviser.
A further announcement will be made in due course with further
details.
Projects update
Namibia
The Minister of Mines and Energy in Namibia (the "Namibian
Ministry") had granted the Company a two year extension to its
exploration licence covering onshore Blocks 1717 and 1718 in the
Owambo Basin until 20 January 2016. As announced on 21 January
2016, the Company intended to consult, in the context of current
market and oil sector conditions, with the Namibian Ministry if and
on what basis the licence might be extended or re-issued, as may be
applicable, for any further period. The Board now expects that
subject to completion of the Subscription, it will not seek to
request any extension or reissue by the Namibian Ministry of this
licence.
Zambia
As announced on 7 January 2016, the Company had been informed by
the Zambian Ministry of Mines, Energy and Water Development (the
"Zambian Ministry") that the Block 34 exploration licence (located
in the Kafue Trough in southwestern Zambia, which covers an area of
approximately 6,427 square kilometres) had been renewed for a
further three years with the condition that the Company conducted
an environmental project brief on or before 14 March 2016 and paid
any outstanding statutory fees due with immediate effect. The
Company intended to seek further clarification from the Zambian
Ministry on the requirements of an environmental project brief and
the fees payable prior to submission of the licence certificate to
the Zambian Ministry for renewal endorsement. The Board now expects
that subject to completion of the Subscription, it will not pursue
the renewal of this licence any further.
Oman
Frontier's request to extend the initial term of the Group's
100%-owned Block 38 located in the Rub Al Khali Basin in the
southwest of the Sultanate of Oman ("Block 38 EPSA") for 24 months
(until 25 November 2017) was granted, subject to Frontier providing
a bank guarantee for the amount required to conduct the amended
work programme by no later than 4 February 2016 ("Funding
Deadline").
While the potential farm-out process of in respect of Block 38
EPSA has been ongoing for some time, and the Company retained the
services of a Dallas-based adviser to assist and provide general
transaction advice on this process, the Board has been unable to
secure any farm-out partner on credible terms. Furthermore, there
has been no investor support for an equity issue to provide further
funding for the Company's interest in Block 38 EPSA.
Accordingly, the Company has been unable to raise sufficient
funding and/or provide a bank guarantee for Block 38 EPSA before
the Funding Deadline. The Company is seeking clarification from the
relevant Oman authorities and unless any extension of the Funding
Deadline is granted, the Block 38 EPSA will have terminated.
AIM status
Should the Block 38 EPSA terminate, then in accordance with AIM
Rule 15, the effect would be that the Company will cease to own,
control or conduct all, or substantially all, of its existing
trading business, activities or assets and would therefore become
an AIM Rule 15 cash shell, pursuant to which it must make an
acquisition or acquisitions which constitutes a reverse takeover
under AIM Rule 14 within six months, failing which the Exchange
will suspend trading in the Company's shares pursuant to AIM Rule
40.
A further announcement will be made in due course.
Total voting rights
Following the issue of the Subscription Shares, the Company's
issued share capital will consist of 5,111,999,056 Ordinary Shares,
with voting rights. This figure may be used by shareholders in the
Company as the denominator for the calculation by which they will
determine if they are required to notify their interest in, or a
change to their interest in, the share capital of the Company under
the Financial Conduct Authority's Disclosure and Transparency
Rules.
Enquiries:
Frontier Resources
International Plc Tel: +44 (0) 020
Neil Herbert, Chairman 3475 8108
Beaumont Cornish (Nomad)
Michael Cornish Tel: +44 (0)20 7628
Roland Cornish 3396
Emily Staples
Beaufort Securities
Limited (Broker) Tel: +44 (0)20 7382
John Belliss 8300
A copy of this announcement is available from the Company's
website www.friplc.com
APPENDIX I
Illustrative timetable of key events
Event Expected date / time
----------------------------- -----------------------
Warrant Bonus Issue Record Monday, 15 February
Date 2016 at 4.30pm
Warrant Bonus Issue Ex-Date Tuesday, 16 February
and time 2016 at 8.00am
Warrants issued to Existing Tuesday, 16 February
Shareholders 2016
Subscription Shares commence Wednesday, 17 February
trading on AIM 2016 at 8.00am
----------------------------- -----------------------
Note:
References to times in this announcement are to London time
unless otherwise stated. The dates set out in the outline timetable
above and mentioned throughout this announcement may be adjusted by
the Company, in which event the details will be notified to the
London Stock Exchange and, where appropriate, to Shareholders.
APPENDIX II
Market Statistics
Subscription Price 0.03 pence
Number of Existing Ordinary Shares 361,999,056
Number of Subscription Shares 4,750,000,000
Enlarged Ordinary Share Capital 5,111,999,056
Subscription Shares as a percentage
of the Enlarged Ordinary Share Capital 92.9%
Number of Warrants 361,999,056
Warrants as a percentage of the Enlarged
Ordinary Share Capital 7.1%
Proceeds of the Subscription (before GBP1,425,000
expenses)
APPENDIX III
The following information is disclosed pursuant to paragraph (g)
of Schedule Two of the AIM Rules for Companies:
As at the date of this announcement, other than his proposed
interest in the Subscription Shares, Adam Reynolds does not hold
any Ordinary Shares.
(MORE TO FOLLOW) Dow Jones Newswires
February 08, 2016 02:00 ET (07:00 GMT)
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