Magnolia Petroleum Plc / Index: AIM /
Epic: MAGP / Sector: Oil & Gas
Magnolia Petroleum
Plc
(‘Magnolia’ or
‘the Company’)
Proposed Capital
Reorganisation and Notice of General Meeting
Magnolia Petroleum Plc, the AIM quoted US focused oil and gas
exploration and production company announces that a circular
(“Circular”) and notice of a general meeting (“GM”) is being sent
to all shareholders. The Company's GM will be held at
15:30 p.m. (BST) on 23 October 2017 at the offices of Pray Walker
P.C., 100 West Fifth Street, Suite 900, Tulsa, OK 74103, USA. The documents will shortly be available
on the Company’s website and an extract of the Circular appears
below.
The information contained within this announcement constitutes
inside information stipulated under the Market Abuse Regulation
(EU) No. 596/2014.
* * ENDS * *
For further information on Magnolia Petroleum Plc visit
www.magnoliapetroleum.com or contact the following:
Rita Whittington |
Magnolia Petroleum Plc |
+01918449 8750 |
Jo Turner / Liam
Murray |
Cairn Financial Advisers
LLP |
+44207213 0880 |
Nick Beeler |
Cornhill Capital Limited |
+44207710 9610 |
Lottie Brocklehurst |
St Brides Partners Ltd |
+44207236 1177 |
Frank Buhagiar |
St Brides Partners
Ltd |
+44207236
1177 |
“LETTER FROM THE
CHAIRMAN OF MAGNOLIA PETROLEUM
PLC
Magnolia Petroleum
plc
(Registered in
England and Wales with company number 05566066)
Directors
Registered Office
Leonard Wallace (Non-executive
Chairman)
Suite 321
Rita Whittington (Chief Executive Director)
19-21
Crawford Street
Derec Norman (Chief Financial
Officer)
London
Lanny Woods (Non-executive Director)
W1H 1PJ
6 October
2017
Proposed Capital
Reorganisation and Notice of General Meeting
Dear Shareholder,
1.
Introduction
It is proposed that at a forthcoming General Meeting,
Shareholders will be asked to approve the Capital
Reorganisation.
The Company currently has 2,633,556,370 Existing Ordinary
Shares. The Directors consider that it is in the best interests of
the Company’s long term development as a public quoted company to
have a more manageable number of issued ordinary shares and to have
a higher share price.
The Capital Reorganisation, which comprises a consolidation and
sub-division of shares, has been structured in such a way so that
each of the New Ordinary Shares created pursuant to the Capital
Reorganisation shall have a nominal value of 0.1 pence. This is achieved by a consolidation of
every 100 Existing Ordinary Shares into one Consolidated Share
followed by an immediate sub-division of each Consolidated Share
into one New Ordinary Share of 0.1
pence and one Deferred Share of 9.9
pence.
All of the Existing Ordinary Shares are proposed to be
consolidated, meaning that whilst the number of shares held will
change, the proportion of issued ordinary shareholdings in the
Company held by each Shareholder immediately before and immediately
after the Consolidation will remain unchanged, save for fractional
entitlements (which are described below).
The Capital Reorganisation is subject to Shareholders’ approval
at the General Meeting, notice of which is set out at the end of
this document.
The purpose of this document is to provide Shareholders with
details of the Capital Reorganisation and to explain why the
Directors are recommending Shareholders vote in favour of this at
the General Meeting.
2. Purpose of
the Capital Reorganisation
The Company’s issued ordinary share capital currently consists
of 2,633,556,370 Existing Ordinary Shares. As a result of the
number of shares in issue, which is significantly higher than many
companies on AIM, the Board believes that the low share price
affects investor perception of the Company and share price
volatility. Further, a public quoted company is unable to
issue shares for less than the nominal value of its ordinary
shares. As the Company’s share price has been trading at
around its nominal value, the directors are also mindful that,
without the Capital Reorganisation, the Company may not be able to
raise funds as opportunities present themselves.
Accordingly, the objective of the Capital Reorganisation is to
reduce the number of Existing Ordinary Shares to a level which is
more in line with other comparable AIM-traded companies with the
intention of also creating a higher share price per ordinary share
in the capital of the Company. The Directors believe that the
Capital Reorganisation should improve the liquidity and
marketability of the ordinary shares. The purpose of the
Sub-Division is to retain a low nominal value of the shares,
similar to the Existing Ordinary Shares, whilst continuing to meet
the statutory requirement of having £50,000 minimum nominal value
of issued share capital.
3. Proposed
Capital Reorganisation
The proposed Capital Reorganisation will comprise three
elements:
i. Adoption of revised memorandum
and articles of association (the “New Articles”).
ii. Consolidation - Every 100 Existing
Ordinary Shares will be consolidated into one Consolidated
Share.
iii. Sub-Division - Immediately following the
Consolidation, each Consolidated Share will then be sub-divided
into one New Ordinary Share of 0.1
pence and one Deferred Share of 9.9
pence.
The Capital Reorganisation requires the passing of the
resolutions in relation to the adoption of the New Articles and the
Capital Reorganisation, being resolutions numbered 1 and 2, at the
General Meeting, which is to be held at 15:30 p.m. BST on 23
October 2017. If the Resolutions are passed, the Capital
Reorganisation will become effective immediately following close of
business on that date.
4. The New
Articles
The Company’s current memorandum and articles of association
were adopted by the Company in October
2009 (the “Current Articles”) and have not been
reviewed or updated since that time. Due to the proposed Share
Capital Reorganisation the Company needs to adopt revised
memorandum and articles of association to establish the Deferred
Shares, and set out the rights and obligations attaching
thereto.
Concurrent with the changes to the memorandum and articles of
association to establish the Deferred Shares, it is proposed that
new provisions are incorporated to also bring the Company’s
bye-laws into line with best practice and market standards on AIM.
Resolution One to be considered at the General Meeting proposes
that the New Articles are adopted by the Company. Below is a
summary of the material differences between the Current Articles
and the proposed New Articles:
(a) Removal of Authorised Share
Capital
Under the New Articles the Company would have no limit on its
authorised share capital. Under the Current Articles the Company’s
authorised share capital is £10,030,000.
(b) Established rights of
Deferred Shares
The New Ordinary Shares arising upon implementation of the
Capital Reorganisation will have the same rights as the Existing
Ordinary Shares including voting, dividend, return of capital and
other rights.
The Deferred Shares will have no dividend or voting rights and,
upon a return of capital, the right only to receive the amount paid
up thereon after the holders of the Ordinary Shares in the capital
of the Company have received not only the aggregate amount paid up
thereon, but also £1 million of return of capital per Ordinary
Share.
The Deferred Shares will not be traded on AIM or any other
market, and no share certificates will be issued in respect of the
Deferred Shares, nor will the CREST accounts of holders of New
Ordinary Shares be credited with any Deferred Shares.
No other changes to the Current Articles are included in the New
Articles.
5.
Consolidation
At the General Meeting, the Directors are inviting Shareholders
to approve the Resolutions which will authorise the Consolidation
pursuant to which every 100 Existing Ordinary Shares will be
consolidated into one Consolidated Share.
In anticipation of the Resolutions being passed by the
Shareholders, the Company will, immediately prior to the General
Meeting, issue such number of additional Ordinary Shares as will
result in the total number of Ordinary Shares in issue being
exactly divisible by 100. Assuming no other Ordinary Shares
are issued between the date of this document and immediately before
the General Meeting, this will result in 30 additional Ordinary
Shares being issued and will create 26,335,564 Consolidated Shares
(subject to any revision to the Company’s issued share capital
between the date of this document and the Record Date).
These 30 additional Ordinary Shares will be issued to the
Company’s registrars, Neville Registrars Limited. Since these
additional shares will only represent a fraction of a New Ordinary
Share, this fraction would be sold pursuant to the arrangements for
fractional entitlements described below.
As all of the Existing Ordinary Shares are proposed to be
consolidated, the proportion of issued ordinary shareholdings in
the Company held by each Shareholder immediately before and
immediately after the Consolidation will, save for fractional
entitlements, remain unchanged.
In the event that the number of Existing Ordinary Shares
attributed to a Shareholder is not exactly divisible by 100, the
Consolidation will generate an entitlement to a fraction of a
Consolidated Share. On the Sub-Division, such fractional
entitlements will be carried over to the relevant New Ordinary
Shares but not the Deferred Shares, and the New Ordinary Shares
which comprise fractional entitlements will then be sold on the
open market (see further explanation at paragraph 7, Fractional
Entitlements to Consolidated Shares, below).
Accordingly, following the
implementation of the Capital Reorganisation, any Shareholder who
as a result of the Consolidation, has a fractional entitlement to
any New Ordinary Shares, will not have a proportionate shareholding
of New Ordinary Shares exactly equal to their proportionate holding
of Existing Ordinary Shares.
Furthermore, any Shareholders holding
fewer than 100 Existing Ordinary Shares as at the Record Date will
cease to be a shareholder of the Company. The minimum
threshold to receive Consolidated Shares will be 100 Existing
Ordinary Shares.
6.
Sub-Division
Immediately following the Consolidation, each Consolidated Share
will be sub-divided into one New Ordinary Share and one Deferred
Share. The Sub-Division has been structured in such a way so that
each of the New Ordinary Shares will have a nominal value of
0.2 pence each.
Where there are fractional entitlements to a Consolidated Share,
the Board considers it fair that, upon Sub-Division, the same
fractional entitlements to a Consolidated Share will apply to each
New Ordinary Share but not a Deferred Share. The rights attached to
the Deferred Shares are set out in Paragraph 10 below.
The Record Date for the Sub-Division will be the same as for the
Consolidation, which is 18:00 p.m. on
19 October 2017.
7. Effects of
the Capital Reorganisation
For purely illustrative purposes, examples of the effects of the
proposed Capital Reorganisation (should it be approved by
Shareholders) are set out below:
Number of Existing
Ordinary Shares held |
Number of New
Ordinary Shares following the Capital Reorganisation |
Number of Deferred
Shares following the Capital Reorganisation |
99 |
0 |
0 |
100 |
1 |
1 |
1,000 |
10 |
10 |
The example below shows a fractional entitlement, the value of
which will depend on the market value of the New Ordinary Shares at
the time of sale.
Number of Existing
Ordinary Shares held |
Number of New
Ordinary Shares following the Capital Reorganisation |
Number of Deferred
Shares following the Capital Reorganisation |
Fractional
entitlement |
2,680 |
26 |
26 |
0.8 |
8. Fractional
Entitlements to Consolidated Shares
As set out above, the Consolidation will give rise to fractional
entitlements to a Consolidated Share where any holding is not
precisely divisible by 100. On Sub-Division of any such
Consolidated Share which occurs immediately thereafter, the same
fractional entitlement will apply to each New Ordinary Share but
not a Deferred Share then arising. As regards the New Ordinary
Shares, no certificates regarding fractional entitlements will be
issued. Instead any New Ordinary Shares in respect of which there
are fractional entitlements will be aggregated and sold in the
market for the best price reasonably obtainable on behalf of
Shareholders entitled to fractions (the “Fractional
Shareholders”).
The Company will distribute the proceeds of sale in due
proportion to any such Fractional Shareholders in accordance with
article 36 of the Articles. In the event that the net proceeds of
sale amount to £3.00 or less, the Board is of the view that, as a
result of the disproportionate costs, it would not be in the best
interests of the Company to distribute such proceeds of sale, which
instead shall be retained for the benefit of the Company in
accordance with article 36 of the Articles.
For the avoidance of doubt, the Company is only responsible for
dealing with fractions arising on registered holdings. For
Shareholders whose shares are held in the nominee accounts of UK
stockbrokers, the effect of the Capital Reorganisation on their
individual shareholdings will be administered by the stockbroker or
nominee in whose account the relevant shares are held. The effect
is expected to be the same as for shareholdings registered in
beneficial names, however, it is the stockbroker’s or nominee’s
responsibility to deal with fractions arising within their customer
accounts, and not that of the Company.
9. Resulting
Share Capital
The issued share capital of the Company immediately following
the Capital Reorganisation (assuming it is approved by the
Shareholders) is expected to comprise 26,335,564 New Ordinary
Shares and 26,335,564 Deferred Shares.
10. Admission of the New
Ordinary Shares
Application will be made for the New Ordinary Shares to be
admitted to trading on AIM in place of the Existing Ordinary
Shares. It is expected that Admission will become effective and
that dealings in the New Ordinary Shares will commence on
24 October 2017.
The Company has applied for a new ISIN and SEDOL which will
become effective following the Capital Reorganisation. The
new ISIN and SEDOL will be notified to the market via an RIS
provider in due course.
Shareholders who hold Existing Ordinary Shares in uncertificated
form will have such shares disabled in their CREST accounts on the
Record Date, and their CREST accounts will be credited with the New
Ordinary Shares following Admission, which is expected to take
place on 24 October 2017.
Following the Capital Reorganisation, existing share
certificates will cease to be valid and new share certificates are
expected to be despatched to those Shareholders who hold their
Existing Ordinary Shares in certificated form, on or around
31 October 2017. No share
certificates will be issued in respect of Consolidated Shares or
Deferred Shares.
11. Effects on Options,
Warrants and Other Instruments
The entitlements to Ordinary Shares of holders of securities or
instruments convertible into Ordinary Shares (such as share options
and warrants) will be adjusted to reflect the Capital
Reorganisation.
As at the date of this document the Company currently has
113,160,205 options in issue and 225,000,000 warrants in
issue. The terms of the options and warrants will be adjusted
to take effect of the Capital Reorganisation. In the event of
completion of the Capital Reorganisation, the exercise price of all
options and warrants over ordinary shares will be repriced in line
with the Consolidation.
12. General Meeting
You will find set out at the end of this document a notice
convening the General Meeting to be held at the offices of Pray
Walker, P.C. at 100 West Fifth Street, Suite 900, Tulsa, OK 74103, USA at 15:30 p.m.
BST (to be held at 10:30 a.m.
local time) on 23 October 2017.
The Resolutions to be proposed at the General Meeting are as
follows:
Resolution 1: Articles
amendment
The Company is proposing to adopt new amended articles of
association in substitution for the existing articles of
association. The principal change introduced by the new articles of
association are the establishment of a new class of deferred share
with no voting rights and significantly reduced economic rights.
Other material changes to the Articles are set out at paragraph 4
of this document.
A copy of the Company’s existing articles of association and the
proposed new articles of association will be available for
inspection during normal business hours (excluding Saturdays,
Sundays and bank holidays) at the offices of Hill Dickinson LLP,
The Broadgate Tower, 20 Primrose Street, London EC2A 2EW from the date of this notice
of meeting until the close of the meeting. The proposed New
Articles will also be available for inspection at the General
Meeting at least 15 minutes prior to the start of the meeting and
up until the close of the meeting. This is a special
resolution.
Resolution 2: Capital
Reorganisation
An ordinary resolution to authorise the Company to undertake the
Capital Reorganisation. The Board considers it desirable to effect
the Capital Reorganisation as it should create a higher share price
and in the Board’s opinion, it should improve the liquidity and
marketability of Ordinary Shares.
13. United Kingdom taxation in relation to the
Capital Reorganisation
For the purposes of UK taxation of chargeable gains, a
Shareholder should not be treated as making a disposal of all or
part of his holding of Existing Ordinary Shares by reason of the
Consolidation. The New Ordinary Shares should be treated as the
same asset, and as having been acquired at the same time and at the
same aggregate cost as, the holding of Existing Ordinary Shares
from which they derive. On a subsequent disposal of the whole or
part of the New Ordinary Shares comprised in the new holding, a
Shareholder may, depending on his or her circumstances, be subject
to tax on the amount of any chargeable gain realised.
If any shareholder is uncertain about his own tax position, he
should seek independent financial advice.
14. Action to be taken
Holders of Existing Ordinary Shares will find enclosed with this
document a Form of Proxy for use by them at the General
Meeting.
Whether or not you are able to attend the General Meeting, you
are requested to complete the enclosed Form of Proxy and return it
to Neville Registrars Limited, Neville
House, 18 Laurel Lane, Halesowen, West Midlands B63 3DA as soon as possible and,
in any event, so as to arrive by 15:30
p.m. on 19 October 2017. The
completion and return of a Form of Proxy will not prevent you from
attending the General Meeting and voting in person if you
subsequently wish to do so.
Shareholders are reminded that, if their Existing Ordinary
Shares are held in the name of a nominee, only that nominee or its
duly appointed proxy can be counted in the quorum at the General
Meeting.
If you are in any doubt as to what
action you should take, you are recommended to seek your own
personal financial advice from your broker, bank manager,
solicitor, accountant or other independent financial adviser
authorised under the Financial Services and Markets Act 2000 (as
amended) if you are resident in the United Kingdom or, if not, from another
appropriately authorised independent financial adviser,
immediately.
15. Recommendation
The Directors consider that the Capital Reorganisation is fair
and reasonable and is in the best interests of the Company and its
Shareholders as a whole and will promote the success of the
Company. The Directors therefore recommend you to vote in favour of
each of the Resolutions.
Yours faithfully
Leonard
Wallace
Non-executive Chairman
DEFINITIONS
The following definitions apply throughout this document
(including the Notice of General Meeting) and the form of proxy
unless the context requires otherwise:
“Act” |
the Companies Act 2006 (as
amended) |
“Admission” |
admission of the New Ordinary Shares
to trading on AIM and such admission becoming effective in
accordance with the AIM Rules |
“AIM Rules” |
the AIM Rules for Companies and the
AIM Rules for Nominated Advisers, as issued by the London Stock
Exchange from time to time |
“AIM” |
the market of that name operated by
the London Stock Exchange |
“Articles” |
the articles of association of the
Company as at the date of this document |
“Cairn” |
Cairn Financial Advisers LLP, the
Company’s Nominated adviser as at the date of this document |
“Capital Reorganisation” |
the Consolidation and the
Sub-Division |
“certificated” or “in
certificated form” |
a share or security which is not in
uncertificated form (that is, not in CREST) |
“Consolidated Shares” |
the ordinary shares of 10 pence each
in the Company to be created following the Consolidation |
“Consolidation” |
the proposed consolidation of every
100 Existing Ordinary Shares into one Consolidated Share |
“CREST” |
a relevant system (as defined in the
CREST Regulations) in respect of which Euroclear is the Operator
(as defined in the CREST Regulations) |
“CREST Regulations” |
the Uncertificated Securities
Regulations 2001 (SI 2001/3755), as amended from time to time |
“Directors” or “Board” |
the existing directors of the
Company whose names are set out on page 4 of this document |
“Deferred Shares” |
the deferred shares of 9.9 pence
each in the capital of the Company to be created following the
Sub-Division |
“Euroclear” |
Euroclear UK & Ireland
Limited |
“Existing Ordinary
Shares” |
the 2,633,556,370 Ordinary Shares in
issue at the date of this document |
“General Meeting” |
a general meeting of the Company to
be held at 15:30 p.m. BST (09:30 a.m. local time) on 23 October
2017 at the offices of Pray Walker P.C., 100 West Fifth Street,
Suite 900, Tulsa, OK 74103, USA or any adjournment thereof, notice
of which is set out in the Notice of General Meeting |
“Group” |
the Company and its subsidiary
undertakings |
“Magnolia” or “the
Company” |
Magnolia Petroleum plc |
“New Articles” |
subject to the Resolutions being
approved, the new memorandum and articles of association to be
adopted by the Company at the General Meeting |
“New Ordinary Shares” |
the ordinary shares of 0.1 pence
each in the capital of the Company to be created following the
Sub-Division |
“Notice of General
Meeting” |
the notice convening the General
Meeting which is set out at the end of this document |
“Ordinary Shares” |
ordinary shares of 0.1 pence each in
the share capital of the Company |
“Record Date” |
18:00 p.m. on 19 October 2017 |
“Regulatory Information
Service” or “RIS” |
the regulatory information services
approved by the London Stock Exchange for the distribution of AIM
announcements |
“Resolutions” |
the resolutions to be proposed at
the General Meeting, details of which are set out in the Notice of
General Meeting |
“Shareholder” |
a holder of Ordinary Shares from
time to time |
“Sub-Division” |
the sub-division of each
Consolidated Share into one New Ordinary Share and one Deferred
Share |
“United Kingdom” |
the United Kingdom of Great Britain
and Northern Ireland. |
“United States” or
“US” |
United States of America and its
territories |