TIDMHAWK
RNS Number : 2193O
Nighthawk Energy plc
09 October 2012
9 October 2012
NIGHTHAWK ENERGY PLC
("Nighthawk" or "the Company")
Settlement Agreement and Purchase Option
Buy back of shares held by Running Foxes Petroleum Inc., Placing
and Subscription
Nighthawk, the US focused shale oil development and production
company (AIM: HAWK and OTCQX: NHEGY), announces that it has agreed
with Running Foxes Petroleum, Inc. ("RFP") a settlement of
Nighthawk's outstanding claims, an option to purchase RFP's
remaining 25% working interest in the Jolly Ranch project, a
buy-back of RFP's entire holding of 102,236,422 shares in Nighthawk
(the "RFP Holding") and the placing and direct subscription of, in
aggregate, an equal number of new ordinary shares with existing
investors and institutional investors.
Settlement - Key Points
-- All existing Nighthawk claims on RFP under the terms of the
Purchase and Sale Agreement ("PSA") dated 23 January 2012 and the
Joint Operating Agreement ("JOA") to be settled by a cash amount,
an option to purchase RFP's remaining 25% working interest in the
Jolly Ranch project and a waiver of certain amounts potentially
owed by Nighthawk to RFP under the PSA
-- The Company has conditionally purchased the RFP Holding for a
total consideration of GBP2.56 million (US$4.14 million), at a
price of 2.5 pence per ordinary share. These shares will be
cancelled following their purchase. RFP will retain US$2.30 million
(GBP1.42 million) of this consideration and the balance of US$1.84
million (GBP1.14 million) will be returned to Nighthawk
-- The purchase of the RFP holding will be funded by the placing
and direct subscription of, in aggregate, 102,236,422 new ordinary
shares (the "New Shares") (the "Placing and Subscription").
Pursuant to the Placing and Subscription, the New Shares have been
subscribed by existing investors and new institutional investors
for a total consideration of GBP4.09 million (US$6.62 million), at
a price of 4 pence per share
-- The additional cash raised by the Placing and Subscription
over the US$4.14 million (GBP2.56 million) required for the
purchase of the RFP Holding will be used for further drilling and
development work at Jolly Ranch
-- As a result of the settlement, the purchase of the RFP
Holding and the Placing and Subscription, Nighthawk will receive
total cash of approximately US$4.33 million (GBP2.67 million)
Purchase Option - Key Points
-- As part of the settlement RFP has granted Nighthawk an
exclusive nine month option to purchase its remaining 25% interest
in the Jolly Ranch project
-- The option may be exercised at any time by Nighthawk
-- The purchase price relates to the period during which the option is exercised:
-- 0-4 months US$10 million
-- 4-6 months US$11 million
-- 6-9 months US$12 million
-- All costs and revenues relating to RFP's working interest
accrue to Nighthawk during the option period
Share Buy-back and Placing and Subscription - Key Points
-- RFP received the RFP Holding as part consideration for the
sale in January 2012 of a 25% working interest in the Jolly Ranch
project in Colorado, USA to Nighthawk
-- The RFP Holding represents approximately 13.6% of the Company's current issued share capital
-- The shares were subject to a lock-in agreement between RFP,
Westhouse Securities Limited and the Company which extended until
23 January 2013
-- As part of the settlement arrangements Nighthawk has
conditionally agreed to buy back the RFP Holding at a price of 2.5
pence per share
-- The buy back of the RFP Holding requires shareholder approval
at a general meeting of shareholders ("GM"), which is expected to
be held on or about 26 October 2012. Prior to the GM, RFP shall
waive all voting and dividend rights attaching to the RFP Holding.
Upon receiving shareholder approval for the repurchase, the shares
will be cancelled and there will be no dilution of shareholders'
interests from the overall transaction
-- Pursuant to the Placing and Subscription, the New Shares have
been subscribed by existing shareholders and new institutional
investors at a price of 4 pence per share
-- A circular containing full details of the proposed buy back
of the RFP Holding and notice of the GM which is expected to be
held on or about 26 October 2012 will be posted within the next few
days
Summary
The Board of Nighthawk believes that this timely settlement of
the numerous and complex issues with RFP is a significant step
forward for the Company and its shareholders. The potential value
of claims resulting from the audit process is unknown, but the time
and resources required to pursue these claims would be
considerable, with no guarantee of success.
The settlement adds substantially to the Company's cash reserves
and enables Nighthawk to plan for additional drilling and work in
2012. Management and financial resources are freed up and a better
future relationship with RFP is anticipated.
The nine month option to purchase RFP's remaining 25% working
interest in Jolly Ranch provides time for Nighthawk to evaluate the
results of its current drilling and development plans. The Board
anticipates that if these plans are successful, the value of the
Jolly Ranch acreage is likely to increase, adding value to the
purchase option. In addition, the arrangement effectively gives
Nighthawk full control over Jolly Ranch over the nine-month period,
and puts the Company in an ideal position to consider farm-out and
other deals with interested third parties.
Stephen Gutteridge, Chairman of Nighthawk, commented:
"Settlement of the outstanding issues with Running Foxes has
many advantages. In particular, we will ensure that the extra cash
now available is invested in Jolly Ranch, maintaining the momentum
of our current development plans, and potentially adding more new
wells to our 2012 program. We also believe that the option
arrangement, with a purchase price range of US$110 to US$130 per
gross acre, offers significant opportunity for value
enhancement."
Additional Notes
The Placing and Subscription
The New Shares will rank pari passu with the Company's existing
ordinary shares of 0.25p each ("Ordinary Shares"). Application has
been made for the New Shares to be admitted to trading on AIM and
it is expected that such admission will become effective on or
around Thursday 11 October 2012.
Following the issue of the New Shares and pending completion of
the share buy-back (which is expected to take place on or about 26
October 2012), the number of Ordinary Shares in issue will increase
to 851,171,842. However, there will be no change in the number of
voting rights during such period as RFP has agreed to waive all
voting rights in respect of the RFP Holding, and so, during such
period (and pending any further notification by the Company), the
figure of 748,935,420 (being the number of Ordinary Shares in issue
immediately prior to the Placing and Subscription) should be used
by shareholders as the denominator for the calculations by which
they will determine if they are required to notify their interest
in, or a change to their interest in, the Company under the FSA's
Disclosure and Transparency Rules. Following completion of the
share buyback, the number of Ordinary Shares in issue will reduce
to 748,935,420.
The Placing and Subscription is being undertaken using the
existing authority granted to the Directors at a general meeting of
the Company held on 20 January 2012.
Related Party Transaction
At the time of the settlement RFP is a substantial shareholder
of Nighthawk as defined in the AIM Rules for Companies and as such
the settlement constitutes a related party transaction in
accordance with Rule 13 of the AIM Rules for Companies. The
directors, having consulted with the Company's nominated adviser,
Westhouse Securities Limited, consider that the terms of the
transaction with RFP are fair and reasonable insofar as the
Company's shareholders are concerned.
- Ends-
Note: Exchange rate used GBP1 = $1.62
Enquiries:
Nighthawk Energy plc 020 3582 1350
Stephen Gutteridge, Chairman
Richard Swindells, Chief Financial
Officer
Westhouse Securities Limited 020 7601 6100
Richard Baty richard.baty@westhousesecurities.com
FTI Consulting 020 7831 3113
Ben Brewerton ben.brewerton@fticonsulting.com
Ed Westropp edward.westropp@fticonsulting.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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