TIDMRUR
RNS Number : 5976F
Rurelec PLC
13 November 2015
13 November 2015
Rurelec PLC
("Rurelec" or the "Company")
Proposals for an Open Offer of up to 353,518,086 Open Offer
Shares, Proposed Capital Reorganisation and Amendments to the
Articles of Association, Proposed Disapplication of Pre-emption
Rights and Notice of General Meeting
The Board of Rurelec announces a proposed Open Offer of up to
353,518,086 Open Offer Shares at 1 pence each to raise up to
GBP3,535,180 before expenses. Qualifying Shareholders will be
entitled to subscribe for Open Offer Shares on the basis of 1 Open
Offer Share for every 1.58800245 Ordinary Shares held on the Record
Date. In addition, Qualifying Shareholders subscribing for their
full entitlement under the Open Offer may also request additional
New Ordinary Shares through the Excess Application Facility. The
Open Offer is not underwritten, and is conditional upon shareholder
approval and a minimum subscription of 247,462,660 Open Offer
Shares.
The Issue Price of 1 pence per Open Offer Share represents a
discount of approximately 9.09% to the closing middle market price
of 1.1 pence for each Existing Ordinary Share in the Company on 12
November 2015.
Shareholders whose Existing Ordinary Shares are held by a
nominee company should contact their custodian to ensure that they
are given the opportunity to participate in the Open Offer. A
Circular setting out details of and the terms relating to the Open
Offer will be posted today to Shareholders and made available on
the Company's website, http://www.rurelec.com . Other potential
investors who are interested in subscribing for any shares
remaining when applications (including under the Excess Application
Facility) from Qualifying Shareholders have been satisfied in full,
should contact the Company's Stockbrokers, WH Ireland Limited
through a professional intermediary, or directly, in the case of
institutional investors.
Notice of General Meeting of the Company is also being posted to
shareholders today. The General Meeting will be held at the offices
of WH Ireland at 24 Martin Lane, London, EC4R 0DR at 12 noon on 30
November 2015. Ordinary resolutions will be proposed to implement
the Open Offer, to amend the Company's Articles of Association and
to sub-divide each Existing Ordinary Share of 2 pence each into one
New Ordinary Share of 0.1 pence each and one Deferred Share of 1.9
pence A special resolution will be proposed to approve a
disapplication of pre-emption rights, which is intended to be used,
inter alia, for a grant of options to Directors.
For further information please contact:
Rurelec PLC W H Ireland
Mark Keegan, Chief Executive Paul Shackleton and James
Bavister
Tel: 020 7793 5610 Tel: 020 7220 1666
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Record Date for entitlement to 6.00 p.m. on
participate in the Open Offer 10 November 2015
--------------------------------------- -----------------------
Announcement of the Open Offer 13 November 2015
and dispatch of the Circular and,
to certain Qualifying Non-CREST
Shareholders, the Application
Form
--------------------------------------- -----------------------
Expected ex-entitlement date for 8.00 a.m. on
the Open Offer 16 November 2015
--------------------------------------- -----------------------
Open Offer Entitlements credited as soon as practicable
to CREST stock accounts of Qualifying after 8.00 a.m.
CREST Shareholders on 17 November
2015
--------------------------------------- -----------------------
Recommended latest time and date 4.30 p.m. on
for requesting withdrawal of 30 November 2015
Open Offer Entitlements from CREST
--------------------------------------- -----------------------
Latest time for depositing Open 3.00 p.m. on
Offer Entitlements into CREST 1 December 2015
--------------------------------------- -----------------------
Latest time and date for splitting 3.00 p.m. on
Application Forms 2 December 2015
(to satisfy bona fide market claims
only)
--------------------------------------- -----------------------
Latest time and date for receipt 11.00 a.m. on
of completed Application Forms 4 December 2015
and payment in full under the
Open Offer or settlement of relevant
CREST instruction (as appropriate)
--------------------------------------- -----------------------
Latest time and date for receipt 12 noon on 27
of completed Forms of Proxy November 2015
--------------------------------------- -----------------------
General Meeting 12 noon on 30
November 2015
--------------------------------------- -----------------------
Record date for Capital Reorganisation 6.00 p.m. on
30 November 2015
--------------------------------------- -----------------------
Open Offer closes 7 December 2015
--------------------------------------- -----------------------
Allotment of Open Offer Shares 9 December 2015
--------------------------------------- -----------------------
Admission of the Open Offer Shares 7.00 a.m. on
to trading on AIM 9 December 2015
--------------------------------------- -----------------------
Open Offer Shares in uncertificated as soon as practicable
form expected to be credited to after 8.00 a.m.
accounts in CREST (uncertificated on 9 December
holders only) 2015
--------------------------------------- -----------------------
Open Offer Shares in certificated by 16 December
form (certificated holders only) 2015
--------------------------------------- -----------------------
OPEN OFFER STATISTICS
Issue Price per Open Offer Share 1 pence
------------------------------------------- -----------------
Closing Price per Ordinary Share 1.1 pence
on the Latest Practicable Date
------------------------------------------- -----------------
Discount to Closing Price of an 0.1 pence
Ordinary Share on the
Latest Practicable Date
------------------------------------------- -----------------
Open Offer Entitlement of Qualifying One Open Offer
Shareholders under the Open Offer Share for every
1.58800245 New
Ordinary Shares
------------------------------------------- -----------------
Number of Ordinary Shares in issue
currently 561,387,586
------------------------------------------- -----------------
Maximum number of Open Offer Shares
to be issued by the
Company pursuant to the Open Offer 353,518,086
------------------------------------------- -----------------
Maximum number of New Ordinary
Shares in issue following the completion
of the Open Offer 914,905,672
------------------------------------------- -----------------
Maximum gross proceeds of the Open GBP3,535,181
Offer
------------------------------------------- -----------------
Open Offer Shares as a percentage 38.64 per cent.
of the Enlarged Share
Capital at maximum subscription
------------------------------------------- -----------------
Estimated net cash proceeds of GBP3,361,573
the Open Offer at maximum
subscription
------------------------------------------- -----------------
Estimated net cash proceeds of GBP2,301,019
the Open Offer at
Minimum Subscription
------------------------------------------- -----------------
ISIN Code for Open Offer Entitlements GB00BYQP5238
------------------------------------------- -----------------
ISIN Code for Open Offer Excess GB00BYQP5345
Offer Shares
------------------------------------------- -----------------
Proposed Capital Reorganisation, amendment of the Articles of
Association, disapplication of pre-emption rights and Proposal for
an Open Offer of up to 353,518,086 Open Offer Shares at 1 pence per
New Ordinary Share
Introduction
The Company announces that it is seeking to raise up to
approximately GBP3,535,181 million (before fees and expenses)
through an Open Offer by way of the issue of up to 353,518,086 Open
Offer Shares at the Issue Price of 1 pence per share.
(MORE TO FOLLOW) Dow Jones Newswires
November 13, 2015 02:00 ET (07:00 GMT)
While the Directors believe that the Company's assets are
sufficient to deliver a partial recovery of shareholder value in
the medium term, Rurelec currently faces an acute shortage of cash.
In the event that the Open Offer is not successful, and other forms
of financing are unavailable, the Company will be unable to pay its
creditors as they fall due and the future of the Company will be
uncertain. The Directors will, in such circumstances, immediately
have to seek emergency financing which may or may not be available.
Failure to secure such funding would be damaging to the business
and may impair the value of the Ordinary Shares. It is imperative,
therefore, that Shareholders vote in favour of the Resolutions and,
where appropriate, support the Open Offer which is not underwritten
and subject to the Minimum Subscription. The Directors are seeking
authority by way of the Resolutions at the General Meeting to
enable them to allot and issue the Open Offer Shares.
The successful outcome of the Open Offer is dependent on the
Shareholders voting in favour of the Resolutions and the Minimum
Subscription being achieved, neither of which is certain. In light
of this, the Directors will, as they have been doing for some
considerable time, continue to attempt to source further financing
for the Company. Any changes in the financial status of the Company
will be notified to Shareholders by way of an announcement on a
Regulatory Information Service as well as by way of a further
shareholder circular if appropriate.
The Company is not able to issue Ordinary Shares at a discount
to their nominal value of 2 pence each and will therefore have to
effect the Capital Reorganisation in order to issue New Ordinary
Shares. Further details of the Capital Reorganisation are included
below.
A Resolution is also being put to Shareholders to allow the
Company to place New Ordinary Shares for cash free from statutory
pre-emption rights to enable finance to be raised in a timely and
cost effective manner in the future in order to be able to meet the
working capital requirements of the Company, this resolution will
include New Ordinary Shares to be issued to the Directors pursuant
to the proposed Directors' Option Grants, further details of which
are provided below in the paragraph entitled "Directors' Option
Grants".
Background
Rurelec PLC was established to own and operate power generation
capacity in Latin America. It was incorporated in 2003 and was
among the first independent power producers to obtain a quotation
for its shares on AIM in 2004. Since the establishment of Rurelec,
it has focused on gas fired power generation projects developing
combined cycle extensions to its power plants in Argentina and also
to its former power generation assets in Bolivia prior to
establishing a small hydro development subsidiary in 2011 known as
Cascade Hydro Limited.
Over recent years, under previous management, the assets of the
Company have been severely depleted by:
-- nationalisation of the Company's interest in Empresa
Electrica Guaracachi S.A in Bolivia in 2010 followed by protracted
and expensive arbitration which resulted in an extremely
unfavourable compensation award of $31.534 million against an
audited book value of GBP47 million;
-- development activity and acquisitions which, particularly in
light of the nationalisation of the Company's interest in Bolivia
referred to above, the Company has not had the resources to secure;
and
-- heavy costs and overheads.
The loss by the Company of its Bolivian assets and the resulting
arbitration in particular caused enormous damage to the Company.
The arbitration process continued for a period of four years.
During this period the Company borrowed heavily both to meet the
costs of the arbitration and to provide essential working capital
against the expectation that it would be awarded a settlement of at
least the audited book value of the appropriated assets. When this
did not occur, this resulted in a critical shortage of funding to
complete the development of replacement assets and to meet the
future working capital requirements of the Company.
The Company now has interests as follows:
-- Argentina. A 50 per cent. interest in EdS, in Argentina held
through Patagonia Energy Limited, a company incorporated in the
British Virgin Islands. Eds owns a 138 MW combined cycle power
plant known as Central Termica Patagonia, located in the coastal
city of Comodoro Rivadavia, the largest city in Southern Argentina,
and helps support the electricity supply to this significant
commercial centre and to the wider region.
-- Peru. Partially developed hydro assets in Peru which have
been pursued through its wholly owned subsidiary Cascade Hydro
Limited, a company incorporated in England, which owns a number of
Peruvian project company subsidiaries.
-- Chile. Partial development of two thermal power projects in
Chile, where sites have been acquired and consents obtained to
construct generating facilities at the Central Illapa project in
Mejillones and the Termoelectrica del Norte S.A. project in Arica.
The Company purchased a Frame 6B turbine for the project in Arica,
which has been shipped to Arica and on 10th June 2013, the Company
entered into a conditional agreement to buy two Siemens
Westinghouse dual fuel turbines for consideration of GBP16.1
million. All the turbines are stored securely in readiness for
commencement of construction of the projects.
Strategy of the New Management
Following the Annual General Meeting of the Company on 14 July
2015, a series of changes to the Board have occurred. The new
executive team has been evaluating the Company's assets under
development in Argentina, Chile and Peru and their prospects in
order for the Board to set a strategy to deliver shareholder value.
The Board has taken further steps to reduce the overheads of its
London headquarters, following the disposal of its former
subsidiary Independent Power Corporation PLC and a move of office
premises. The Board has implemented a reduction in staff numbers
and cost management initiatives which have resulted in business
practices being tightened and discretionary expenditure
minimised.
Argentina
The Board intends to maintain its ownership of its principal
asset in Argentina. The Directors note recent press speculation
that the next year may see very important changes in currency and
capital controls in Argentina, which could reverse the difficulties
of the past few years during which the Company has been unable to
repatriate sums in respect of repayments of interest and capital on
approximately $40 million of loans which it extended to construct
the combined cycle plant. Eds now produces annual gross revenues of
approximately $27 million, although current exchange controls in
Argentina place certain restrictions on transferring funds from
Argentina back to Rurelec PLC.
Peru
The Board has determined that the small hydro portfolio in Peru
will be particularly costly to develop and these assets have now
been offered for sale.
Chile
The Board recognises the need to protect the Company's assets
under development in Chile. Both projects have reached a stage
where they are largely capable of being taken forward into
construction if funding and suitable joint venture partners are
identified. These projects can, therefore, either be fully
developed and then held as valuable revenue generating assets, or
sold in an orderly fashion maximising value for shareholders. No
decision has been taken at the current time; the Directors will
monitor the situation carefully and evaluate opportunities as they
arise. Both scenarios, however, require the Company to be
adequately funded.
In the event that the Minimum Subscription is reached and the
medium term financial security of the Company is achieved, the
Board will look to make further Director appointments as necessary
to improve the Company's corporate governance and efficacy of the
Board.
As part of an effort to reduce Company overheads, the Directors
intend to relocate the Company's offices to a location more cost
effective and appropriate. A further announcement is expected to be
made in due course.
Directors' Option Grant
Shareholders should be aware that the Company is intending to
grant the Directors (in such proportions as it may decide) options
to subscribe for such number of New Ordinary Shares as are equal to
up to 5 per cent. of the Enlarged Share Capital. No options have
been granted to the current Executive Directors to date. Authority
to allot such New Ordinary Shares is included in Resolution 4. It
is expected that the share options issued will be subject to
certain performance share price critera.
Current trading and outlook
Rurelec needs to raise capital to meet the costs of the business
over the next twelve months. On 6 November 2015 the Company
announced that it had secured and drawn down a GBP600,000 Loan
Facility with Radix, further details of which are set out in
paragraph 7 of the Circular. The Directors intend inter alia to
repay the Loan from the proceeds of the Open Offer. The Open Offer
is an important planned part of the Company's strategy which should
enable the Directors to identify routes through which the loans
extended by the Company to fund the Group's operations in Argentina
can be repaid and the partially developed assets in Peru and Chile
can be completed or sold.
The Company faces an acute shortage of cash and is managing its
resources carefully on a day to day basis. The Directors are
cautiously confident about the medium term prospects of the Chilean
and Argentinian assets but shareholder value is contingent upon,
inter alia, the successful outcome of the Open Offer or other
financing.
The Open Offer, if successful, will allow the Board to pursue
its objective of re-building and re-establishing Rurelec as a
stable and sustainable business by focusing on the development of
its core assets.
(MORE TO FOLLOW) Dow Jones Newswires
November 13, 2015 02:00 ET (07:00 GMT)
The Directors consider that additional funding may be raised, if
appropriate, to develop the Company's partially developed assets in
Chile. The Directors intend where possible to secure this funding
by way of project funding, rather than equity placings. Once the
business has been stabilised, the Directors consider that capital
should be available on more favourable terms than are currently
available.
Use of Proceeds
The Company is seeking to raise up to GBP3,361,573 after costs
from the Open Offer. The Company intends to use the proceeds
received from the Open Offer primarily for the following specific
items:
-- to provide essential working capital to safeguard existing
assets where the Board believes these are core to shareholder
value. It is anticipated, without limitation that this would
involve expenditure on further development where necessary;
-- To pay certain outstanding creditors including Ethos Energy and other trade creditors.
-- to secure valuable assets including in particular turbines
currently held in storage facilities for the projects in Chile;
-- to meet the costs of a more streamlined London headquarters
with a reduced but suitably qualified number of personnel;
-- to progress the sale of all non-core assets including the
Company's Peruvian hydro portfolio;
-- to meet insurance costs for fixed assets;
-- for employment and general administrative costs which are
expected to be at considerably lower levels than in previous years;
and
-- Without limitation to the above to provide general working capital.
Short Term Finance
On 6 November 2015 the Company entered into a short term loan
facility with Radix for a principal amount of GBP600,000. The Loan
Facility is secured by a debenture creating a fixed and floating
charge over all of the Company's assets. The Loan Facility is to be
repaid on or before 31 December 2015. The Company shall pay
interest on the unpaid principal amount of the Loan Facility drawn
down and outstanding from time to time until the date of repayment
at the rate of one per cent. per calendar month. Interest shall be
paid on the date of repayment of the principal amount. The Loan
Facility was drawn down in full by the Company on 6 November
2015.
Capital Reorganisation
As the price at which the Company's Ordinary Shares are traded
on AIM has fallen below the nominal value of such Ordinary Shares,
it will be necessary, in order to implement the Open Offer, first
to reduce the nominal value of the Ordinary Shares.
The Company currently has in issue 561,387,586 Ordinary Shares
of two pence each and, as at the Latest Practicable Date, the
middle market price per Ordinary Share was 1.1 pence. The price at
which the Company's Ordinary Shares are traded on AIM has fallen
below the nominal value of such Ordinary Shares and the Company is
prohibited by section 580 Companies Act 2006 from issuing ordinary
shares at less than their nominal value. The Board considers,
therefore, that it is in the best interests of Shareholders to
effect the Capital Reorganisation in order to be able to facilitate
the Open Offer to raise essential finance for the Company.
The proposed Capital Reorganisation will result in the
reorganisation of the share capital of the Company by sub-dividing
each Ordinary Share into one New Ordinary Share of 0.1 pence each
and one Deferred Share of 1.9 pence each as is more particularly
described in the Resolutions and in the adoption by the Company of
the New Articles. The Resolutions, if passed, will then allow the
Company to proceed with the Open Offer.
The rights attached to the New Ordinary Shares shall be
identical in all respects with the rights attached to the Ordinary
Shares. The Deferred Shares will not entitle holders to receive
notice of or attend and vote at any general meeting of the Company
or to receive a dividend or other distribution or to participate in
any return of capital on a winding up (other than the nominal
amount paid up on such shares following a distribution to the
holders of the New Ordinary Shares). The Deferred Shares will not
be admitted to trading on AIM. Accordingly, the Deferred Shares
will, for all practical purposes, be valueless and it is the
Board's intention that, at an appropriate time, the Company will
repurchase the Deferred Shares or cancel or otherwise seek the
surrender of the Deferred Shares using such process as the
Directors shall determine is compliant with the provisions of the
Companies Act 2006 and the New Articles.
The Capital Reorganisation will not change the number of
Ordinary Shares in issue.
The Board is asking Shareholders to approve the adoption by the
Company of the New Articles for the purposes of including the
rights and restrictions attaching to the Deferred Shares as set out
above.
Key changes proposed to the Company's Articles of
Association
As a result of the Capital Reorganisation a new class of share,
the deferred share, shall be created. The New Articles of
Association, a copy of which is set out in Part V of the Circular,
are proposed to be adopted at the General Meeting in order to set
out the rights and restrictions that will apply to the New Ordinary
Shares and the Deferred Shares. The New Ordinary Shares shall enjoy
all the rights and restrictions currently enjoyed by the Existing
Ordinary Shares.
In particular, the Deferred Shares:
-- shall not have any voting rights;
-- shall not entitle their holders to any dividend or right to
participate in profits of the Company;
-- shall entitle their holders to receive only the nominal
amount paid up on each Deferred Share held on any return of capital
or a winding up and provided the holders of the New Ordinary Shares
have first received GBP100 million on each New Ordinary Share after
the return of the amount paid up on each New Ordinary Share;
-- may be sold by the Directors at any time for the aggregate consideration of GBP1;
-- may be subject of a capital reorganisation involving the
cancellation of the Deferred Shares without any repayment of
capital; and
-- may be the subject of a purchase by the Company of its own shares.
As such the Deferred Shares shall be valueless. The Deferred
Shares shall not be admitted to trading on AIM.
Information on the Open Offer
The Directors have given careful consideration as to the
structure of the proposed fundraising and have concluded that the
Open Offer is the most suitable option available to the Company and
its Shareholders at this time having regard to the importance of
pre-emption rights to Shareholders, the composition of the
Company's register of members, the Company's current share price
and in particular, to meet the objective of achieving a cost
effective and efficient fundraising.
Conditional upon the Resolutions being passed and subject to
receipt of valid applications, it is proposed that up to
353,518,086 Open Offer Shares will be issued through the Open Offer
at 1 pence per Open Offer Share to raise aggregate gross proceeds
of up to GBP3,535,181.
The Board acknowledges the importance of the support of both
private shareholders and its institutional investors. The Open
Offer is intended to give all Shareholders the opportunity to
participate in the fund raising. The Open Offer will enable all
Shareholders to participate in the fundraising on a pro rata basis.
In addition Shareholders will be offered the opportunity to apply
for Excess Offer Shares in excess of their pro rata entitlement
pursuant to the Excess Application Facility details of which are
set out in paragraph 3 of Part II of the Circular. The Directors
may allocate any Excess Offer Shares for which applications are
received to Qualifying Shareholders who have applied for their Open
Offer Entitlement in full in such proportions as they see fit in
their sole and absolute discretion.
If applications under the Excess Application Facility are
received for more than the total number of Excess Offer Shares
available following take up of Open Offer Entitlements such
applications may be allocated in such manner as the Directors may
determine in their absolute discretion. No assurance can be given
that applications by Qualifying Shareholders for Excess Offer
Shares pursuant to the Excess Application Facility will be met in
full or at all.
The Open Offer is not underwritten. There can, therefore, be no
certainty as to the aggregate level of subscription for the Open
Offer Shares. If the aggregate level of subscription is less than
the Minimum Subscription for the Open Offer Shares, and other
subscribers cannot be found, the Open Offer will not proceed and
subscription monies will be returned to applicants without any
interest.
Your attention is drawn to the paragraph below entitled "Working
Capital".
Principal terms of the Open Offer
Conditional upon the Resolutions being passed to give effect to
the Capital Reorganisation and to provide the Directors with
authority to allot the Open Offer Shares (including any Excess
Offer Shares), the Open Offer Shares will be offered to Qualifying
Shareholders by way of the Open Offer in accordance with statutory
pre-emption provisions set out in section 561 of the Act.
Qualifying Shareholders will, pursuant to the Open Offer, be
offered the opportunity to subscribe for 1 Open Offer Share for
every 1.58800245 New Ordinary Shares held on the Record Date at the
Issue Price.
The Open Offer will provide an opportunity for all Qualifying
Shareholders to participate in the fundraising pro rata to their
current holdings of Existing Ordinary Shares (and of New Ordinary
Shares following the Capital Reorganisation referred to above) with
the option to subscribe for Excess Offer Shares pursuant to the
Excess Application Facility (as referred to below). Any fractional
entitlements to Open Offer Shares which are not taken up by
Shareholders shall be aggregated and made available as part of the
Excess Application Facility.
(MORE TO FOLLOW) Dow Jones Newswires
November 13, 2015 02:00 ET (07:00 GMT)
An Excess Application Facility will be made available as part of
the Open Offer which will enable Shareholders, who so wish, to
apply for Open Offer Shares in excess of their Open Offer
Entitlement in the event that certain other Qualifying Shareholders
do not wish to take up their Open Offer Entitlements and with
respect to any fractional entitlements. If the Open Offer is not
subscribed in full the Board may allot and issue any Excess Offer
Shares which are not subscribed by Qualifying Shareholders under
the Excess Application Facility to investors who express an
interest in subscribing for the same.
It should be noted that the Open Offer is not a rights issue.
The Application Form pursuant to which Qualifying Non-CREST
Shareholders can apply for Open Offer Shares is not a document of
title and cannot be traded.
The Open Offer is limited to a maximum aggregate amount of not
more than EUR5 million which avoids the need for the Company to
publish a prospectus pursuant to Prospectus Directive 2003/71/EC
thereby saving the Company from incurring the cost and time delay
associated with preparing and publishing a prospectus.
If a Qualifying Shareholder does not take up any of his or their
Open Offer Entitlement, his or their proportionate ownership and
voting rights in the Company will be diluted by up to 38.64 per
cent. by the issue of the Open Offer Shares.
The Open Offer is not underwritten. There can be no certainty as
to the aggregate level of subscription for Open Offer Shares. If,
though the aggregate level of subscription is less than the Minimum
Subscription, the Open Offer will not proceed and subscription
monies will be returned to applicants.
The latest date and time for acceptance and payment in full
under the Open Offer is 11.00 a.m. on 4 December 2015. Full details
of the terms and conditions of the Open Offer and how to apply are
set out in Part II of the Circular.
Assuming that the Resolutions are passed and all others
conditions are satisfied, the Open Offer will, if fully subscribed,
raise gross proceeds of up to GBP3,535,181.
The Issue Price represents a 9.09 per cent. discount to the
Closing Price of 1.1 pence per Ordinary Share on the Latest
Practicable Date.
The Open Offer Shares will when issued be credited as fully paid
and will rank equally in all respects with the New Ordinary Shares,
including the right to receive all dividends and other
distributions declared, made or paid in respect of the New Ordinary
Shares.
Open Offer Entitlement
Qualifying Shareholders are invited, on and subject to the terms
and conditions of the Open Offer, to apply for any number of Open
Offer Shares at the Issue Price up to their Open Offer
Entitlement.
Qualifying Shareholders have an Open Offer Entitlement of:
1 Open Offer Share for every 1.58800245 New Ordinary Share
registered in the name of the
relevant Qualifying Shareholder on the Record Date.
Open Offer Entitlements under the Open Offer will be rounded
down to the nearest whole number and any fractional entitlements to
Open Offer Shares will be disregarded in calculating Open Offer
Entitlements.
The aggregate number of Open Offer Shares available for
subscription pursuant to the Open Offer will not exceed 353,518,086
Open Offer Shares.
Excess Application Facility
Any Qualifying Shareholder may apply for any number of Excess
Offer Shares in excess of his, her or their total Open Offer
Entitlement provided they have subscribed for their Open Offer
Entitlement in full. If applications under the Excess Application
Facility are received for more than the total number of Excess
Offer Shares available following take up of Open Offer Entitlements
such applications may be allocated in such manner as the Directors
may determine in their absolute discretion. No assurance can be
given that applications by Qualifying Shareholders for Excess Offer
Shares pursuant to the Excess Application Facility will be met in
full or at all. To the extent that any Excess Offer Shares
available for subscription are not subscribed for by Qualifying
Shareholders, the Company shall seek to place such Excess Shares
with investors who have expressed an interest in subscribing for
the same by completing and returning an Application Form to the
Registrars together with payment.
Application procedure under the Open Offer
The procedure for application and payment is set out in the
Circular and, where relevant, on the Application Form which will be
dispatched to Qualifying Shareholders today.
Application for Admission
Application will be made to the London Stock Exchange for the
Open Offer Shares to be admitted to trading on AIM. It is expected
that Admission will occur and trading in the Open Offer Shares will
commence at 8.00 a.m. on 9 December 2015. No temporary documents of
title will be issued.
The Open Offer Shares will, following Admission, rank pari passu
in all respects with the New Ordinary Shares in issue following the
Capital Reorganisation and will carry the right to receive all
dividends and distributions declared, made or paid on or in respect
of the New Ordinary Shares after Admission.
Important Notice
Qualifying Shareholders should note that the Open Offer is not a
rights issue. Unlike with a rights issue, any Open Offer Shares not
applied for by Qualifying Shareholders under their Open Offer
Entitlements will not be sold in the market on behalf of, or
otherwise placed for the benefit of those Qualifying Shareholders
who did not apply for their Open Offer Entitlements but will be
made available to Shareholders as part of the Excess Application
Facility.
In issuing the Circular and structuring the Open Offer, the
Company is relying on the exemption pursuant to Paragraph 9 of
Schedule 11a FSMA from the requirement in Section 85 (1) FSMA to
publish a prospectus.
Any Qualifying Shareholder who has sold or transferred all or
part of his registered holding(s) of Existing Ordinary Shares prior
to the date on which the Ordinary Shares are marked
'ex-entitlement' is advised to consult his stockbroker, bank or
other agent through or to whom the sale or transfer was effected as
soon as possible since the invitation to apply for Open Offer
Shares under the Open Offer may be a benefit which may be claimed
from him by the purchasers under the rules of the London Stock
Exchange.
Effect of the Open Offer
Upon completion of the Open Offer, the Open Offer Shares will
represent approximately 38.64 per cent. of the Enlarged Share
Capital on the basis that the Open Offer will be subscribed in
full.
Overseas Shareholders
The attention of Qualifying Shareholders who have registered
addresses outside the United Kingdom, or who are citizens or
residents of countries other than the United Kingdom, or who are
holding Ordinary Shares for the benefit of such persons (including,
without limitation, subject to certain exceptions, custodians,
nominees, trustees and agents), or who have a contractual or other
legal obligation to forward the Circular or (if applicable) an
Application Form to such persons, is drawn to the information which
appears in paragraph 6 of Part II of the Circular.
In particular, Qualifying Shareholders who have registered
addresses in or who are resident in, or who are citizens of,
countries other than the UK (including, without limitation, the
United States or any other Restricted Jurisdiction) should consult
their professional advisers as to whether they require any
governmental or other consents or need to observe any other
formalities to enable them to take up their Open Offer Entitlements
and to apply for Excess Offer Shares under the Excess Facility
Application.
Resolutions
Set out at the end of the Circular is the Notice of General
Meeting to convene a general meeting of the Company to be held at
the offices of WH Ireland, 24 Martin Lane, London, EC4R 0DR, at 12
noon on 30 November 2015 at which the following resolutions will be
proposed:
-- Resolution 1: as an ordinary resolution to approve the
Capital Reorganisation and subdivide each of the Company's Ordinary
Shares of two pence (GBP0.02) each in the capital of the Company
into:
- one New Ordinary Share with a nominal value of 0.1 pence (GBP0.001); and
- one Deferred Share with a nominal value of 1.9 pence (GBP0.019);
-- Resolution 2: as an ordinary resolution to authorise the
Directors to allot (i) the Open Offer Shares to Qualifying
Shareholders who subscribe for Open Offer Shares pursuant to the
Open Offer and for any Excess Shares not taken up by Qualifying
Shareholders to be issued to investors; (ii) New Ordinary Shares
pursuant to the exercise of any options granted to Directors to
subscribe for New Ordinary Shares as described in paragraph 4
above; (iii) New Ordinary Shares for cash up to a value of
GBP91,490;
-- Resolution 3: as a special resolution to approve the changes
to the Existing Articles to give effect to the Capital
Reorganisation and to adopt the New Articles as the articles of
association of the Company, conditional upon the Resolution to
approve the Capital Reorganisation being passed; and
-- Resolution 4: as a special resolution to disapply statutory
shareholder pre-emption rights in relation to the issue of (i) New
Ordinary Shares pursuant to the exercise of any options granted to
Directors to subscribe for New Ordinary Shares as described in
paragraph 4 above; (ii) New Ordinary Shares for cash up to a value
of GBP91,490. This Resolution is conditional upon Resolution 2
being passed.
The Resolutions to give effect to the Capital Reorganisation are
necessary because the price at which the Company's Ordinary Shares
are traded on AIM has fallen below the nominal value of such
Ordinary Shares. Due to the restrictions in the Companies Act, the
Company is not able to issue new Ordinary Shares for a price which
is less than their nominal value. The Company will not be able to
proceed with the Open Offer unless it sub-divides the Existing
Ordinary Shares in the manner proposed by the Resolutions and
adopts the New Articles.
(MORE TO FOLLOW) Dow Jones Newswires
November 13, 2015 02:00 ET (07:00 GMT)
The proposed share split into New Ordinary Shares and Deferred
Shares will not affect the share price of the Ordinary Shares as
the full value of the Ordinary Shares will attach to the New
Ordinary Shares and the Deferred Shares will effectively be
valueless. The Deferred Shares will carry no right to vote and no
right to a dividend.
EUR5 million exemption and possible need to scale back
subscriptions
In making the Open Offer the Company is relying on the exemption
pursuant to section 85(5) FSMA and paragraph 9 of Schedule 11A FSMA
from the requirement in section 85(1) FSMA to publish a prospectus
where an offer of transferable securities is being made to the
public under section 102B FSMA. This exemption requires the total
proceeds received under the Open Offer to be less than EUR5 million
in aggregate.
Subject to the Resolutions being passed and the Open Offer
proceeding, the Issue Price of the Open Offer Shares will represent
an approximate 9.09 per cent. discount to the Closing Price of 1.1
pence per Ordinary Share on the Latest Practicable Date.
Application will be made to the London Stock Exchange for the
Open Offer Shares to be admitted to trading on AIM. Subject to
receiving applications to subscribe for at least the Minimum
Subscription of GBP2,474,627 it is expected that Admission of the
Open Offer Shares to trading on AIM will occur on 9 December
2015.
Taxation
Shareholders who are in any doubt as to their tax position, or
who are subject to tax in a jurisdiction other than the UK should
consult an appropriate professional adviser immediately.
Working Capital
Assuming full subscription under the Open Offer is achieved the
Company will not require additional external funding subject to the
completion of certain intended sales. In the event that these sales
do not complete, or there is a material delay in completion,
further working capital will be required by the Company by the
second quarter of 2016. The Directors would expect to cover any
such working capital shortfall by a draw-down of cash reserves from
EdS.
If the Minimum Subscription is achieved (rather than the Open
Offer being subscribed above this level) additional working capital
will be required by the second quarter of 2016. The Directors would
expect to cover any such working capital shortfall by a draw-down
of cash reserves from EdS.
The Open Offer is conditional upon the Resolutions being passed
and is subject to a Minimum Subscription of GBP2,474,627 being
obtained and is not underwritten. Accordingly the outcome cannot be
guaranteed. In the event that the Resolutions are not passed or the
Minimum Subscription is not met, Admission will not occur and
subscription monies will be returned to applicants. Should this
occur, the Company will be unable to pay its creditors as they fall
due and the future of the Company will be uncertain. The Directors
will, in such circumstances, immediately have to seek emergency
financing which may or may not be available. Failure to secure such
funding would be damaging to the business and may impair the value
of the Ordinary Shares.
The successful outcome of the Open Offer is dependent on the
Shareholders voting in favour of the Resolutions and the Minimum
Subscription being achieved, neither of which is certain. In light
of this, the Directors will, as they have been doing for some
considerable time, continue to attempt to source further financing
for the Company. Any changes in the financial status of the Company
will be notified to Shareholders by way of an announcement on a
Regulatory Information Service as well as by way of a further
shareholder circular if appropriate.
Risk Factors
Shareholders should consider fully and carefully the risks
associated with the Open Offer. Your attention is drawn to the risk
factors set out in Part III of the Circular (Risk Factors) which
are in the opinion of the Directors the principal risks and
uncertainties likely to affect the business. It is though
emphasised these risk factors are not exclusive.
Intention of the Directors in relation to the Open Offer
The Directors intend to take up their respective Open Offer
Entitlements in full and subscribe for an aggregate of 283,375 Open
Offer Shares as set out below:
Open Offer Directors Number of Ordinary Shares
Brian Rowbotham 283,375
The Directors, in aggregate together with their immediate
families or persons connected with them (within the meaning of
Section 252 to 254 of the Act) hold 450,000 Existing Ordinary
Shares (and will following the passing of the Resolutions hold an
equivalent number of New Ordinary Shares), representing
approximately 0.08 per cent. of the Ordinary Shares in issue at the
Latest Practicable Date.
An announcement will be released to the market in due course
notifying the market of the acceptance by Directors and their
families or connected persons of any Open Offer and the effect on
their subsequent shareholdings in the Company.
Dilution
On completion of the Open Offer (and on the basis that it is
fully subscribed) the issued ordinary share capital of the Company
will be increased by approximately 62.97 per cent., resulting in an
immediate dilution of approximately 38.64 per cent. in aggregate
for holders of ordinary shares in the Company, save to the extent
that they subscribe for their Open Offer Entitlement in full.
Share Capital
On Admission, on the basis that the Open Offer is fully
subscribed, the Company will have 914,905,672 Ordinary Shares in
issue. The Open Offer Shares will represent a maximum of
approximately 38.64 per cent. of the Enlarged Share Capital.
Recommendation
The Board of Directors of the Company has resolved that the
Capital Reorganisation, the Resolutions being proposed at the
General Meeting and the Open Offer are in the best interest of
Shareholders as a whole. Shareholders should note that unless the
Resolutions are passed at the General Meeting the Capital
Reorganisation and ultimately the Open Offer cannot be implemented
with the result that the Open Offer Shares will not be allotted and
issued and the Company will not receive the Open Offer proceeds. If
this were to be the case, the Company is unlikely to have
sufficient working capital and it is likely that the Directors
would need (in order to fulfil their duties to the Company's
creditors) to seek alternative sources of finance which may not be
available. Accordingly the Directors recommend that Shareholders
vote in favour of the Resolutions as they intend to in respect of
their own holdings amounting in aggregate to 450,000 Ordinary
Shares.
The Directors are not making a recommendation to Qualifying
Shareholders as to whether they should take up their entitlement
under the Open Offer. Such decision will depend on each Qualifying
Shareholder's individual circumstance. Accordingly, the Board of
Directors of the Company strongly recommends that Qualifying
Shareholders take their own independent financial advice before
making a decision as to whether or not to take up their entitlement
under the Open Offer and to apply for any Excess Offer Shares
pursuant to the Excess Application Facility.
DEFINITIONS
The following definitions apply throughout the Circular and the
Application Form unless the context requires otherwise:
"Act" the Companies Act 2006;
--------------------------- -----------------------------------------
"Admission" the admission of the Open Offer
Shares to trading on AIM and
such
admission becoming effective
in accordance with the AIM Rules;
--------------------------- -----------------------------------------
"AIM" the AIM market operated by the
London Stock Exchange;
--------------------------- -----------------------------------------
"AIM Rules" the AIM Rules for Companies published
by the London Stock
Exchange;
--------------------------- -----------------------------------------
"Application Form" the application form accompanying
the Circular to be used by
Qualifying Non-CREST Shareholders
in connection with the Open Offer;
--------------------------- -----------------------------------------
"Business Day" any day on which banks are generally
open in England and Wales
for the transaction of business,
other than a Saturday, Sunday
or public holiday;
--------------------------- -----------------------------------------
"Capital Reorganisation" the proposed sub-division and
reclassification of the Ordinary
Shares into New Ordinary Shares
and Deferred Shares, further
details of which are set out
in paragraph 8 of the Chief Executive's
letter in the Circular;
--------------------------- -----------------------------------------
"certificated" the description of a share or
or "in certificated other security which is not in
form" uncertificated form (that is
not in CREST);
--------------------------- -----------------------------------------
"Closing Price" the closing middle market quotation
of an Ordinary Share or New
Ordinary Share following the
Capital Reorganisation as derived
(MORE TO FOLLOW) Dow Jones Newswires
November 13, 2015 02:00 ET (07:00 GMT)
from the AIM Appendix to the
Daily Official list of the London
Stock Exchange;
--------------------------- -----------------------------------------
"Company" or "Rurelec" Rurelec PLC, a company registered
in England and Wales with
registration number 04812855,
with registered office at 7th
Floor, North Tower, 55 Baker
Street, London W1U 8EW, United
Kingdom;
--------------------------- -----------------------------------------
"CREST" the relevant system (as defined
in the CREST Regulations) in
respect of which Euroclear is
the Operator (as defined in the
CREST Regulations);
--------------------------- -----------------------------------------
"CREST member" a person who has been admitted
by Euroclear as a system
member(as defined in the CREST
Regulations);
--------------------------- -----------------------------------------
"CREST participant" a person who is, in relation
to CREST, a system participant
(as
defined in the CREST Regulations);
--------------------------- -----------------------------------------
"CREST Regulations" the Uncertificated Securities
Regulations 2001 (SI 2001/3755),
as
amended from time to time;
--------------------------- -----------------------------------------
"CREST sponsor" a CREST participant admitted
to CREST as a CREST sponsor;
"CREST sponsored member" a CREST
member admitted to CREST as a
sponsored member;
--------------------------- -----------------------------------------
"Deferred Shares" the deferred shares of 1.9 pence
each in the capital of the Company
to be created pursuant to the
Capital Reorganisation as set
out in the Resolutions;
--------------------------- -----------------------------------------
"Directors" or the existing directors of the
"Board" Company whose names are set out
on
page 7 of the Circular;
--------------------------- -----------------------------------------
"Directors' Option the proposed grant of options
Grants" to the Directors equal to 5 per
cent.
of the Enlarged Share Capital;
--------------------------- -----------------------------------------
"EdS" Energia del Sur, S.A. a company
registered in Argentina, owned
by Patagonia Energy Limited;
--------------------------- -----------------------------------------
"Enlarged Share the 914,905,672 New Ordinary
Capital" Shares in issue immediately
following Admission (on the basis
that the maximum number of Open
Offer Shares are allotted) but
assuming no New Ordinary Shares
are issued between the date of
the Circular and Admission;
--------------------------- -----------------------------------------
"Excess Application the terms and conditions of the
Facility" Open Offer pursuant to which
Qualifying Shareholders may apply
for additional Offer Shares in
excess of their Open Offer Entitlement
in accordance with the terms
and conditions of the Open Offer;
--------------------------- -----------------------------------------
"Excess Offer Shares" Open Offer Shares applied for
by Qualifying Shareholders under
the Excess Application Facility;
--------------------------- -----------------------------------------
"Excluded Overseas other than as agreed by the Company
Shareholders" and WH Ireland or as permitted
by applicable law, Shareholders
who are located or have registered
addresses in a Restricted Jurisdiction
or any other jurisdiction where
to subscribe for Open Offer Shares
pursuant to the Open Offer might
constitute a violation of local
securities laws or regulations;
--------------------------- -----------------------------------------
"Existing Articles" the articles of association of
the Company as at the date of
the Circular;
--------------------------- -----------------------------------------
"Existing Ordinary the 561,387,586 Ordinary Shares
Shares" in issue at the date of the Circular;
--------------------------- -----------------------------------------
"FSMA" The Financial Services and Markets
Act 2000, an Act to make
provision about the regulation
of the financial services and
markets in the UK;
--------------------------- -----------------------------------------
"Form of Proxy" the form of proxy accompanying
the Circular for use at the
General Meeting;
--------------------------- -----------------------------------------
"General Meeting" the general meeting of the Company
convened by the Notice of
General Meeting;
--------------------------- -----------------------------------------
"Group" the Company and its subsidiaries
and subsidiary undertakings;
--------------------------- -----------------------------------------
"Issue Price" 1 pence per Open Offer Share;
--------------------------- -----------------------------------------
"Latest Practicable means 12 November 2015 being
Date" the last practicable date prior
to
the publication of the Circular;
--------------------------- -----------------------------------------
"Loan Facility" the short term loan facility
of GBP600,000 entered into between
Radix
and the Company;
--------------------------- -----------------------------------------
"London Stock Exchange" London Stock Exchange plc;
--------------------------- -----------------------------------------
"Minimum Subscription" GBP2,474,627;
--------------------------- -----------------------------------------
"New Articles" the new articles of association
proposed to be adopted by the
Company pursuant to the Resolutions;
--------------------------- -----------------------------------------
"New Ordinary Shares" the new ordinary shares of 0.1
pence each in the capital of
the
Company to be created following
the sub division of the Ordinary
Shares pursuant to the Capital
Reorganisation as set out in
the Resolutions;
--------------------------- -----------------------------------------
"Notice of General the notice of general meeting
Meeting" attached to the Circular and
convening a general meeting of
the Company on 30 November 2015
at the offices of WH Ireland,
24 Martin Lane, London EC4R 0DR;
--------------------------- -----------------------------------------
"Open Offer" the conditional invitation by
the Company to Qualifying Shareholders
to apply to subscribe for Open
Offer Shares at the Issue Price
on the terms and subject to the
conditions set out in the Circular
and in the case of the Qualifying
Non-CREST Shareholders only,
the Application Form;
--------------------------- -----------------------------------------
"Open Offer Entitlement" the Open Offer Shares which a
Qualifying Shareholder is entitled
to
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