Magnolia Petroleum Plc Proposed Capital Reorganisation & Notice of GM

 
TIDMMAGP 
 
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. 
 
                                 * *S * * 
 
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     [phone] 
                           LLP 
 
Nick Beeler                Cornhill Capital Limited     [phone] 
 
Lottie Brocklehurst        St Brides Partners Ltd       [phone] 
 
Frank Buhagiar             St Brides Partners           [phone] 
                           Ltd 
 
              "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 GBP50,000 
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 GBP 
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 GBP1 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    Number of New Ordinary Number of Deferred Shares 
     Ordinary Shares held      Shares following the     following the Capital 
                             Capital Reorganisation            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      Number of New Number of Deferred       Fractional 
 Ordinary Shares held    Ordinary Shares   Shares following      entitlement 
                           following the        the Capital 
                                 Capital     Reorganisation 
                          Reorganisation 
 
                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 GBP3.00 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       a share or security which is not in 
certificated form"          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     the regulatory information services approved by 
Service" or "RIS"           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 
 
 
 
END 
 

(END) Dow Jones Newswires

October 09, 2017 02:00 ET (06:00 GMT)