Echo Energy PLC Circ re. allotment authorities and consolidation (2616E)

TIDMECHO

RNS Number : 2616E

Echo Energy PLC

05 May 2017

Echo Energy plc

("ECHO" or the "Company")

Authority to allot shares, warrants and disapply pre-emption rights

Proposed Consolidation of Ordinary Shares

and

Posting of Circular and Notice of General Meeting

Further to the announcement on 18 April 2017, the Company will today post to its Shareholders a circular (the "Circular") containing a notice convening a general meeting to be held at 1.00 p.m. on 22 May 2017 at the Amba Hotel, Charing Cross, The Strand, London WC2N 5HX.

The following has been extracted without material amendment from the Circular which will be available shortly from the Company's website at www.echoenergyplc.com. The same definitions apply throughout this announcement as are applied in the Circular.

   1.          Introduction 

On 18 April 2017, the Company announced a Latin American gas strategy focused on multi Tcf (trillion cubic feet), low cost, onshore gas piped to high value, growing markets. Simultaneously, and in support of this strategy, the Company announced a non-binding heads of terms relating to a GBP23M institutional funding.

Further to the announcement on 18 April 2017 of the signing of non-binding heads of terms, the Company is proposing to seek authority to allot shares pursuant to the Subscription and Warrants pursuant to the Warrant Issue.

The Company is also proposing to consolidate its Existing Ordinary Shares pursuant to the Consolidation.

   2.          Background to and reasons for the proposals 

The Company believes that the combination of economic growth across parts of the LATAM region and the increasing forecast shortage of gas in the major markets of Brazil and Argentina, together with a historic period of regional underinvestment in the sector provides a compelling investment proposition for investors at this specific point in the cycle.

The Company therefore plans to acquire a series of assets across the region, leveraging existing pipeline infrastructure and processing capability thereby enabling any new discoveries to be brought to market quickly. The Company intends to selectively bring in pre-identified strategic partners to the business to fund and technically de-risk such assets.

The Company anticipates this Subscription will fund the commencement of its asset and portfolio acquisition strategy and now requires a General Meeting to provide the necessary authorities.

The Company's current issued share capital consists of approximately 6.1 billion Existing Ordinary Shares. The Board considers that the current issued share capital is considerably higher than similar sized companies on AIM and it believes that this negatively affects investors' perception of the Company. Accordingly, following consultation with certain of the Company's Shareholders, the Consolidation is being proposed in order to reduce the number of Ordinary Shares that are in issue to a level more in line with other comparable companies traded on AIM. The Directors believe that the Consolidation should improve the liquidity and marketability of Ordinary Shares to a range of investors, including institutional investors. The Board is confident that the Consolidation will make the Ordinary Shares a more attractive investment proposition.

   3.          Share Authorities 

In order to effect:

   (a)         the Subscription; 

(b) the issue of warrants pursuant to the terms of the Subscription and the Loan Note Issue; and

   (c)         the issue of the Initial Greenberry Warrants, 

the Company has convened the General Meeting to seek appropriate shareholder authorities to enable it to effect the Subscription and the relevant issues of Warrants. In addition, the Company is seeking further general authorities to issue Ordinary Shares for cash on a non-pre-emptive basis to be limited to a maximum of 33 per cent of the Company's Enlarged Share Capital.

   4.          The Consolidation 

At the General Meeting, the Directors are inviting Shareholders to approve a Resolution which will authorise the Consolidation. The share capital of the Company will be re-organised by consolidating all of the Existing Ordinary Shares as at close of business on 22 May 2017 into ordinary shares of 0.25 pence on the basis of one Consolidated Share for every 25 Existing Ordinary Shares, such shares having the same rights and being subject to the same restrictions (save as to nominal value) as the Existing Ordinary Shares as set out in the Articles.

Following the Consolidation, the number of warrants in issue will be adjusted in line with the ratio of the Consolidation and the exercise price of each issued warrant will be adjusted accordingly.

The Consolidation will take effect on 23 May 2017, being the date of Admission.

Application will be made for the Consolidated Shares to be admitted to trading on AIM in place of the Existing Ordinary Shares. Subject to the shareholder approval of Resolution 5, it is expected that admission to AIM will become effective and that dealings in the Consolidated Shares will commence on 23 May 2017.

Following the Consolidation, the Company's new ISIN Code will be GB00BF0YPG76 and its new SEDOL Code will be BF0YPG7.

CREST and share certificates

For shareholders who hold their shares in uncertificated form it is expected that Consolidated Shares will be credited to shareholders' CREST accounts on 23 May 2017.

Certificates representing Existing Ordinary Shares will no longer be valid if the Consolidation is approved at the General Meeting. For shareholders who hold their shares in certificated form, new share certificates in respect of the Consolidated Shares are expected to be posted by Share Registrars to certificated shareholders in their new form by 2 June 2017. The new share certificates will be sent by first class post at the risk of the shareholder.

   5.             General Meeting 

A notice convening a General Meeting of the Company, to be held at the Amba Hotel, Charing Cross, The Strand, London WC2N 5HX on 22 May 2017 at 1:00 p.m. is set out in the Circular. At the General Meeting, the following Resolutions will be proposed:

(1) an ordinary resolution to grant authority to the Directors to allot Ordinary Shares and the Warrants pursuant to section 551 of the Act, being up to an aggregate nominal amount of GBP1,029,315;

(2) subject to and conditional on the passing of the resolution referred to in paragraph 1 above, a special resolution to disapply the statutory pre-emption rights contained in section 561(1) of the Act in respect of the allotment of Ordinary Shares and the Warrants with an aggregate nominal amount of up to GBP1,029,315;

(3) an ordinary resolution to grant a general authority to the Directors to allot up to 122,951,200 Consolidated Shares in the capital of the Company or to grant rights to subscribe for or convert any security into shares in the capital of the Company pursuant to section 551 of the Act, being up to an aggregate nominal amount of GBP307,378. This authority will be limited to not more than 33 per cent. of the Enlarged Share Capital. The authority will expire at the conclusion of the next Annual General Meeting of the Company;

(4) a special resolution to disapply the statutory pre-emption rights contained in section 561(1) of the Act in respect of the allotment of up to 122,951,200 equity shares with an aggregate nominal amount of up to GBP307,378. This authority will be limited to not more than approximately 33 per cent. of the Enlarged Share Capital. The authority will expire at the conclusion of the next Annual General Meeting of the Company; and

(5) an ordinary resolution to consolidate the Company's ordinary share capital on the basis of one Consolidated Share for every 25 Existing Ordinary Shares as at close of business on 22 May 2017.

   6.          Directors' recommendation 

The Directors consider the Resolutions to be in the best interests of the Company and its Shareholders as a whole.

Accordingly, the Directors unanimously recommend that Shareholders vote in favour of the Resolutions to be proposed at the General Meeting.

For further information please contact:

 
Independent Resources / Echo Energy 
 James Parsons, Chairman 
 Greg Coleman, Chief Executive Officer          [e-mail] 
                                                [e-mail] 
 
   ZAI Corporate Finance Limited - Nominated Adviser                  [phone] 

John Treacy / Peter Trevelyan-Clark / Jamie Spotswood

Brandon Hill Capital Limited - Broker [phone]

Jonathan Evans / Oliver Stansfield

The information contained within this announcement is considered to be inside information prior to its release as defined in Article 7 of the Market Abuse Regulation No. 596/2014 and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

 
Posting of the Circular and Form                     5 May 2017 
 of Proxy 
Last time and date for receipt              1:00 p.m. on 18 May 
 of Forms of Proxy                                         2017 
                                            1:00 p.m. on 22 May 
General Meeting                                            2017 
                                              close of business 
Record date for the Consolidation                on 22 May 2017 
Admission and commencement of               8:00 a.m. on 23 May 
 dealings in the Consolidated                              2017 
 Shares following the Consolidation 
 

References to the time in this document and Notice of General Meeting are to British Summer Time (BST).

KEY STATISTICS

 
 Total number of Ordinary Shares 
  as at the date of this document     6,157,367,008 
 Total number of warrants in issue 
  at the date of this document*       2,871,676,140 
 Total number of options granted 
  at the date of this document        1,565,455,734 
 

* This includes 1,007,583,127 warrants to be issued to Greenberry following the General Meeting pursuant to the loan agreement entered into with Greenberry on 3 March 2017.

DEFINITIONS

The following definitions apply throughout this document unless the context otherwise requires:

 
 "Act"                   the UK Companies Act 2006 (as 
                          amended from time to time) 
 "Admission"             the admission to trading on AIM 
                          of the Consolidated Shares taking 
                          place in accordance with the 
                          AIM Rules for Companies 
 "AIM"                   the market of that name operated 
                          by the London Stock Exchange 
 "AIM Rules for          the AIM Rules for Companies, 
  Companies"              as published and amended from 
                          time to time by the London Stock 
                          Exchange 
 "Articles"              the articles of association of 
                          the Company as at the date of 
                          this document 
 "Board"                 the board of directors of the 
                          Company from time to time 
 "certificated"          not in uncertificated form 
  or "certificated 
  form" 
 "Company" or "Echo      Echo Energy plc, a company incorporated 
  Energy"                 in England and Wales with registered 
                          number 5483127 
 "Consolidated           the ordinary shares of 0.25p 
  Shares"                 each in the capital of the Company 
                          following the Consolidation 
 "Consolidation"         the proposed consolidation of 
                          every 25 Existing Ordinary Shares 
                          into one Consolidated Share 
 "CREST"                 the relevant system for the paperless 
                          settlement of trades and the 
                          holding of uncertificated securities 
                          operated by Euroclear UK & Ireland 
                          in accordance with the CREST 
                          Regulations 
 "CREST Regulations"     the Uncertified Securities Regulations 
                          2001, as amended 
 "Directors"             the directors of the Company 
 "Enlarged Share         the issued ordinary share capital 
  Capital"                of the Company immediately following 
                          Admission, the Consolidation 
                          and the Subscription 
 "Euroclear UK           Euroclear UK & Ireland Limited, 
  & Ireland" or           the operator of CREST 
  "Euroclear" 
 "Existing Ordinary      the existing ordinary shares 
  Shares"                 of 0.01p each in the capital 
                          of the Company 
 "Form of Proxy"         the form of proxy relating to 
                          the General Meeting being sent 
                          to Shareholders 
 "General Meeting"       the general meeting of the Company 
                          convened for 1.00 p.m. on 22 
                          May 2017 (or any adjournment 
                          of it 
 "Greenberry"            Greenberry Plc of 43A/1 Saint 
                          Paul's Building, West Street, 
                          Valletta VLT 1532, Malta 
 "Greenberry Loan        the proposed issue of EUR15,000,000 
  Notes"                  aggregate principal amount of 
                          Secured Notes 2017 of the Company 
                          to be listed on the Official 
                          List of the Luxembourg Stock 
                          Exchange and issued to Greenberry 
 "Greenberry Warrants"   the proposed issue of warrants 
                          to Greenberry to subscribe for 
                          ordinary shares of the Company 
 "Group"                 the Company and its subsidiary 
                          undertakings 
 "Initial Greenberry     the 1,007,583,127 warrants to 
  Warrants"               be issued to Greenberry being 
                          the balance outstanding pursuant 
                          to a warrant instrument of the 
                          Company dated 3 March 2017 
 "LATAM"                 Latin America 
 "Loan Note Issue"       the proposed issue of the Greenberry 
                          Loan Notes 
 "London Stock           London Stock Exchange plc 
  Exchange" 
 "Ordinary Shares"       Existing Ordinary Shares or Consolidated 
                          Shares, as the context requires 
 "Resolutions"           the resolutions set out in the 
                          notice of the General Meeting 
 "Shareholders"          holders of Ordinary Shares 
 "Subscription"          the proposed subscription of 
                          new Ordinary Shares to raise 
                          gross proceeds of approximately 
                          GBP10 million 
 "Subscription           the proposed issue of warrants 
  Warrants"               to subscribe for ordinary shares 
                          of the Company in connection 
                          with the Subscription 
 "subsidiary"            a "subsidiary undertaking" as 
                          that term is defined in the Act 
 "uncertificated"        recorded on the relevant register 
  or "uncertificated      or other record of the share 
  form"                   or other security concerned as 
                          being held in uncertificated 
                          form in CREST, and title to which, 
                          by virtue of the CREST Regulations, 
                          may be transferred by means of 
                          CREST 
 "United Kingdom"        the United Kingdom of Great Britain 
  or "UK"                 and Northern Ireland 
 "GBP" or "Pounds"       UK pounds sterling, being the 
                          lawful currency of the United 
                          Kingdom 
 "Warrant Issue"         the proposed issue of the Initial 
                          Greenberry Warrants, the Greenberry 
                          Warrants and the Subscription 
                          Warrants 
 "Warrants"              the Initial Greenberry Warrants, 
                          the Greenberry Warrants and the 
                          Subscription Warrants 
 "ZAI"                   ZAI Corporate Finance Limited, 
                          the Company's nominated adviser 
 

This information is provided by RNS

The company news service from the London Stock Exchange

END

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