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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Off. Hydro | LSE:OHM | London | Ordinary Share | GB0034272194 | ORD 1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 5.25 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMOHM RNS Number : 0775T Offshore Hydrocarbon Mapping PLC 22 September 2010 PRESS RELEASE 22 September 2010 Offshore Hydrocarbon Mapping plc ("PLC", "Company" or "Group") GBP2.0 million to be raised in placings of new ordinary shares; divestment of marine acquisition business; and $3.0 million WISE services agreement The Directors of Offshore Hydrocarbon Mapping plc ("PLC") are pleased to announce that detailed terms have been agreed with Sector Asset Management and its affiliates ("Sector") and Euro Trans Skips AS ("ETS")(together the "Concert Party") for: · the investment by the Concert Party of GBP2.0 million in the Company by subscribing for 20 million new Ordinary Shares in two tranches at a price of 10 pence per share, representing a premium of approximately 21.2% to the closing mid-market price on 21 September 2010 (the "Placings"); · the sale to a new company to be formed and controlled by the Concert Party of the Group's two wholly owned subsidiaries (OHM Ltd ("OHM Ltd") and OHM Surveys Sdn Bhd ("OHM Malaysia") which together provide the Group's marine CSEM data acquisition services, for a combined consideration of $150,000 (together the "Disposals"); and · establishment of a services agreement between the Company and OHM Ltd so as to enable them together to continue to provide a seamless integrated CSEM service to the oil industry following the Disposals. The terms in relation to the Placings and the Disposals (together the "Proposals") are non-binding and remain subject to a number of conditions, including: · Publication of a circular to shareholders seeking consent: o for the purposes of AIM Rule 15 to the Disposals, due to their size in relation to the Company; o for the purposes of the Companies Act 2006, in order to effect the second tranche of the Placings. The Company currently has authority to issue 9.0 million shares on a non pre-emptive basis and accordingly needs consent to issue a further 11.0 million shares to the Concert Party; and those resolutions being duly passed and · Consent from a majority of independent shareholders (excluding the Concert Party)(the "Independent Shareholders") for a waiver of the requirement under Rule 9 of the Takeover Code for the Concert Party to make a mandatory offer for the Company. The Company expects to obtain the formal consent from more than 50 per cent. of the Independent Shareholders shortly in order to be able to approach the Takeover Panel for approval to such waiver. · The Transfers (as defined below) taking place prior to completion of the Proposals ("Completion"). The first and second tranches of the Placings are not inter-conditional. The Placings and the Disposals, as well as the entering into of certain agreements ancillary thereto, will constitute related party transactions for the purposes of AIM Rule 13. The Concert Party, as well as Skips AS Sol, with whom the members of the Concert Party are deemed to act in concert, propose, subject to agreeing the remaining terms of the Disposals, not to vote in relation to the shareholder resolutions referred to above. The Disposals will lead to the Group's CSEM data acquisition assets (tangible assets, intangible assets and working capital balances) leaving the Group for a consideration of $150,000 with the result that the Group's consolidated shareholders' equity will be reduced by approximately GBP6 million. This will be reflected as an exceptional charge to the Group's profit and loss account. The Company's operational results for the year ended on 31 August 2010 should be in line with the revenue and EBITDA guidance provided in the trading update released on 29 June 2010. Prior to the Disposals, the Company and OHM Ltd each propose to transfer certain assets and employees so as to ensure that those assets and employees relating to the data acquisition business which are currently owned/employed by the Company will be transferred to OHM Ltd and any assets and employees within OHM Ltd which relate to the geophysical consulting business carried on by PLC and Rock Solid Images, Inc. ("RSI") are transferred to PLC (the "Transfers"). The anticipated result of the Transfers is that the correct assets will be held by the company carrying on the relevant business. These Transfers will be made at arm's length values and the net amount owing by PLC to OHM Ltd, which is likely to be approximately GBP800,000, will be deducted from the inter-company loan account balance due from OHM Ltd to PLC and forms an element of the GBP6 million write-off referred to above. It is intended that this asset transfer agreement will be entered into and completed prior to the Company completing the Disposals. Pending Completion, in the event of a material adverse change in the business of either of OHM Limited or OHM Malaysia the parties have reserved the right to terminate all agreements relating to the Proposals whereupon ETS would have the right to call upon OHM Limited to repay the Deferred Payments (as defined below), subject to a grace period of 45 days in the event that the termination was at the instigation of the Concert Party. The Company has provided warranties relating to the proper disclosure to the Concert Party of any material adverse change prior to Completion which, if not complied with, would provide the Concert Party with the right of redress for a period of one year following Completion, subject to a cap of $2.0 million. Further details of the Placings and the Disposals will be set out in a circular to shareholders to be published in due course once conditional binding agreements are reached relating to the Proposals. The circular will (inter alia) explain why the Directors believe the Proposals to be in the best interests of shareholders, though the Directors would draw attention to the fact that, in their opinion, if the Proposals are not consummated in full in the near future the Group may run out of funding alternatives which would lead to the Directors seeking alternative though possibly less attractive options to avoid placing OHM Ltd and OHM Malaysia into administration. Background to and reasons for the Proposals Although business conditions for the Group have improved somewhat since April 2010, the marine acquisition component of the Group continues to be loss making. This division continues to consume capital, including capital previously allocated to other areas of the Group's activities and significant capital investment will be needed in the near future to replace items of offshore survey equipment which are currently approaching the end of their useful lives. In the Directors' opinion, the marine acquisition business requires an additional $10 million in the period to 31 December 2011 to fund working capital and investment which, given the Group's current financial position, and the state of the equity and debt capital markets in general, presents a major challenge. The Concert Party is proposing to provide such funding to OHM Ltd and OHM Malaysia following the Disposals. The Directors believe that, though the market for marine CSEM will continue to improve, the continuing capital intensity of the marine acquisition business is unsustainable in the short term for the Group given its current capital resources. Additionally, the Directors believe that the Group's geophysical processing and interpretation consulting business, conducted principally through the Group's wholly owned subsidiary, RSI, requires working capital and investment over the next 18 months of approximately $3 million. This would be provided through part of the proceeds of the Placings, as well as the prepayment due under the WISE Services Agreement, details of which are set out below. As well as removing the burden on the Company of providing OHM Ltd and OHM Malaysia with near term working capital, the Disposals will also assist the Group's current working capital constraints in as much as OHM Ltd is currently due to pay ETS approximately $3 million in respect of the vessel charter agreements (as amended in August 2009), which is currently the subject of a letter of forbearance from ETS (the "Deferred Payments"). Following completion of the Proposals, this liability will no longer be a Group liability. OHM Ltd entered into a $2 million credit facility in December 2009 with affiliates of two of the Company's largest shareholders (East Hill Hedge Fund, LLC and certain of its affiliates ("East Hill") and ETS) which is now fully drawn. In order to implement the Disposals the Company will need to repay East Hill from the proceeds of the Placings the principal of $1 million (plus accrued interest and costs). In addition ETS will be entitled to be repaid its principal of $1 million plus accrued interest. The Directors intend to repay both these sums from the net subscription proceeds shortly after the Proposals have taken place. It is intended that both East Hill and ETS will release the security each has from the Group upon such repayment. The holdings of the Concert Party, together with Skips AS Sol, with whom the members of the Concert Party are deemed by the Takeover Panel to act in concert are, and will be, following completion of each tranche of the Placings, as follows: +------------+------------+----------+-----------+-----------+------------+------------+-----------+ | Concert | Existing | % of | Ordinary | % of | Ordinary | Ordinary | % of | | Party | holding | existing | Shares | the | Shares | Shares | the | | Member | of | issued | to be | enlarged | to be | held | enlarged | | | Ordinary | share | issued | issued | issued | following | issued | | | Shares | capital | on first | share | on | the | share | | | | | tranche | capital | second | second | capital | | | | | of | following | tranche | tranche | following | | | | | Placing | the first | of | of | the | | | | | | tranche | Placing | Placing | Placings | | | | | | of | | | | | | | | | Placing | | | | +------------+------------+----------+-----------+-----------+------------+------------+-----------+ | ETS and | 19,904,457 | 21.99 | 3,000,000 | 23.02 | 3,666,667 | 26,571,124 | 24.04 | | its | | | | | | | | | affiliates | | | | | | | | +------------+------------+----------+-----------+-----------+------------+------------+-----------+ | Sector | 21,863,348 | 24.15 | 6,000,000 | 28.00 | 7,333,333 | 35,196,681 | 31.85 | | and its | | | | | | | | | affiliates | | | | | | | | +------------+------------+----------+-----------+-----------+------------+------------+-----------+ | Skips | 87,500 | 0.10 | None | 0.09 | None | 87,500 | 0.08 | | AS Sol | | | | | | | | +------------+------------+----------+-----------+-----------+------------+------------+-----------+ | Total | 41,855,305 | 46.24 | 9,000,000 | 51.11 | 11,000,000 | 61,855,305 | 55.97 | +------------+------------+----------+-----------+-----------+------------+------------+-----------+ The Proposals represent the culmination of a protracted process for the Board. A range of alternative solutions for raising the necessary finance have been considered and tested, however the Directors do not believe these to be commercially viable in the Group's current circumstances. Whilst the Directors also considered placing OHM Ltd and OHM Malaysia into administration, this was considered to be a far less attractive alternative for the Group and its stakeholders as, among other things, the Company would likely lose access to some or all components of the Group's CSEM marine survey and processing capabilities, the OHM brand would be severely damaged and there would be a commensurate loss of employment for staff. Information on the Group following the Proposals (the "Remaining Group") Following the Disposals, the Remaining Group will no longer conduct CSEM surveys and will become a specialist interpreter of seismic, CSEM and well data. The Company is routinely asked to reprocess and interpret third party CSEM data and this change in the business model acknowledges the Group's comparative advantage in processing and interpretation. Data acquisition will no longer be core to the Group however the Company will continue to have a close working relationship with the divested businesses. The Remaining Group, with increased cash resources and improved financial stability as a result of the Proposals, will be able to concentrate its efforts and resources in developing and marketing its advanced capabilities in the integration of geophysical data types, with particular expertise in CSEM and seismic. The Directors believe that this transaction will: · enable the Remaining Group to grow its share of the existing seismic inversion market, as well as maintaining a share of the CSEM data processing market; and · unlock the value of the WISE integration technology already developed in the Group, which in the Directors' view is where the key value in CSEM lies and where the Remaining Group can best position itself for future growth. The Directors believe there are benefits to shareholders in the development and growth of the Remaining Group's business, which should grow in value as non-seismic methods such as CSEM and magneto telluric ("MT") become more widely used, and demand for integration with seismic increases. At the same time, it is envisaged that the Remaining Group will, through its commonality of shareholders, and under the auspices of a services agreement and a relationship agreement (details of which are set out below), maintain close links with OHM Ltd and OHM Malaysia, thereby providing the Remaining Group with access to highly specialised data capture and marine survey functionality, without the need for the attendant capital commitment. WISE services agreement and relationship agreement In order for OHM Ltd and OHM Malaysia and the Remaining Group to continue to provide a seamless integrated CSEM service to the oil industry, the Company and OHM Ltd propose to enter into a services agreement (the "Services Agreement") for the provision of: · CSEM processing and interpretation services to OHM Ltd and OHM Malaysia by the Remaining Group; and · marine CSEM/MT data acquisition services to the Remaining Group by OHM Ltd and OHM Malaysia. Under the terms of the Services Agreement, OHM Ltd and OHM Malaysia will agree to prepay $3.0 million ("the Advance Payment")($2.0 million on completion of the Disposals and $1.0 million by 30 November 2010) to the Remaining Group to secure 2,033 man-days of WISE Services at a rate of $2,200 per day, of which $1,475 per day is prepaid by way of the Advance Payment, with a balance of $725 per day payable as the man-days are utilised. WISE services are those services relating to the advanced combination of CSEM data and seismic information to provide analysis of rock and fluid properties. The Services Agreement will further provide for the provision by the Remaining Group of certain administrative and other management functions to OHM Ltd and OHM Malaysia and vice versa following completion of the Proposals. Such services will be provided at contracted rates which have been agreed between the parties on an arm's length basis. With a view to preserving the independence of the Company from its majority shareholders (with whom the Directors anticipate having close commercial dealings in the future, as described above) and the Company's suitability as an AIM company following completion of the Proposals, the Company proposes to enter into a relationship agreement with the Concert Party (the "Relationship Agreement"). The Relationship Agreement will provide that for so long as the members of the Concert Party control 25 per cent. or more of the voting rights in the Company, the majority of the members of the Board shall be independent of the Concert Party. Richard Cooper, PLC CEO commented: "The investment in PLC should allow the Remaining Group to build on its reputation for providing high quality seismic and CSEM interpretation services and further develop our WISE integration technology, including investigating new applications and markets for these services. The existing Group has struggled to compete in the offshore marine CSEM acquisition market owing to a lack of investment capital and inefficiencies within the operating model. By divesting this business, the Group will remove significant current and future cash liabilities and free up management time and investment resources to allow us to concentrate on adding value to data using existing seismic and CSEM interpretation technology and newly developed WISE integration approaches. As importantly, we believe the combination of OHM Ltd's marine acquisition group with Euro Trans Skips AS and the OHM Leader and OHM Express vessels will create a secure partner with whom we can work to provide a seamless integrated CSEM data acquisition and data analysis service, which includes the full range of WISE technology." Contact: +---------------------------------------+---------------------+ | Offshore Hydrocarbon Mapping plc | www.ohmsurveys.com | +---------------------------------------+---------------------+ | Richard Cooper - Chief Executive | 0870 429 6581 | | Officer | | +---------------------------------------+---------------------+ | Bob Auckland- Finance Director | 0870 429 6581 | +---------------------------------------+---------------------+ | KBC Peel Hunt (Nominated adviser & | | | Broker) | | +---------------------------------------+---------------------+ | Julian Blunt/David Anderson | 020 7418 8900 | +---------------------------------------+---------------------+ | Aquila Financial Ltd (PR) | | +---------------------------------------+---------------------+ | Peter Reilly | 0118 979 4100 | +---------------------------------------+---------------------+ This information is provided by RNS The company news service from the London Stock Exchange END MSCEAXNFADKEEFF
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