Path Investments plc Proposed Placing to raise £10 million (0852W)

TIDMPATH

RNS Number : 0852W

Path Investments plc

30 July 2018

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA, SINGAPORE OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.THIS ANNOUNCEMENT HAS NOT BEEN APPROVED BY THE LONDON STOCK EXCHANGE, NOR IS IT INTED THAT IT WILL BE SO APPROVED.

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND SHALL NOT CONSTITUTE AN OFFER TO SELL OR ISSUE OR THE SOLICITATION OF AN OFFER TO BUY, SUBSCRIBE FOR OR OTHERWISE ACQUIRE ANY NEW ORDINARY SHARES OF PATH INVESTMENTS PLC IN ANY JURISDICTION IN WHICH ANY SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER THE MARKET ABUSE REGULATION (EU No. 596/2014). UPON THE PUBLICATION OF THIS ANNOUNCEMENT VIA REGULATORY INFORMATION SERVICE THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

Path Investments plc

('Path' or 'the Company')

Proposed Placing to raise GBP10 million to complete the Farm-In Agreement

EIS Advanced Assurance Received

Path Investments plc (TIDM: PATH) is pleased to announce that it proposes to raise GBP10 million by way of a placing (the "Placing") of new ordinary shares in the Company (the "Placing Shares").

The net Placing proceeds will give the Company sufficient funds to complete the farm-in agreement (the "FIA") with 5P Energy GmbH ("5P Energy") in relation to the proposed acquisition of a 50 per cent. Participating Interest in a producing gas field, the Alfeld-Elze II Licence and Gas Field in Germany. The effect of the FIA is that Path will be cash generative from completion.

The Company intends to join the dividend list in the first half of 2019.

The terms of the Placing including the number of Placing Shares, the Placing price and allocations are at the discretion of Cantor Fitzgerald Europe ("Cantor Fitzgerald") which is acting as joint financial adviser, broker and bookrunner and a further announcement confirming these details will be made following the conclusion of the Placing. Shard Capital ("Shard") is acting as joint financial adviser and broker in the transaction.

EIS and VCT status

Path has received advanced assurance from HMRC that the Placing Shares are capable of being a "qualifying holding" for the purpose of investment by an investor seeking EIS relief. The Company also anticipates subscription by VCTs in the Placing Shares should be regarded as a subscription in eligible shares and form a qualifying holding under the relevant legislation, however HMRC has informed the Company that it no longer considers speculative advance assurance applications pending confirmation of the names of the VCTs who are considering an investment.

Placing Shares that are allocated to EIS and VCT investors will be limited to funds not exceeding GBP5 million in order to not exceed the maximum amount that can be raised annually through risk capital schemes.

Overview of the FIA and Use of Funds

-- The Company announced on 15 December 2017 that Path had entered into a conditional farm-in agreement with 5P Energy in relation to the acquisition by the Company of a 50 per cent. Participating Interest in the producing Alfeld-Elze II Licence and gas field in Germany.

-- Completion of the FIA will occur as soon as practicable following Admission, however the economic benefits and obligations of the FIA transfer to Path on the effective date of 1 January 2018.

-- Following completion, Path will acquire a 50 per cent. non-operated Participating Interest in the producing onshore Alfeld-Elze II gas field located approximately 22 kilometres south of Hanover in Niedersachsen, Germany and covering a total of 64.6 square kilometres.

-- Existing current gross production from the first vertical well, H-WD Z2, is approximately 84.0 Mm3/d (c. 3.0 MMscf/d), amounting to approximately EUR4 million of gross annual revenue.

-- Between 1 January 2015 and 31 March 2018 the H-WD Z2 well has produced a cumulative 85.5 MMm3 (3.0 bcf) of gas.

-- The re-drilling of a second well at Alfeld-Elze II, the A-EZ Z4(2) well was completed in February 2018 and subject to testing, final approvals and commissioning, production from A-EZ Z4(2) is anticipated to commence in H2 2018 and will be funded to production by the net proceeds of the Placing ("Phase 1").

-- Path's competent person's report estimates gross 2P reserves of 560 MMm3 (19.8 bcf) and gross 2C (mid) contingent resources of 1,802 MMm3 (63.6 bcf).

-- The Second phase of the Alfeld-Elze II field development plan includes preparatory work such as the reinterpretation of seismic data and the development of a full field simulation model in order to optimise the locations of further wells. This is expected to be followed by the drilling of up to three additional new horizontal or slanted wells, with the objective of maximising reservoir contact and delivering enhanced production levels ("Phase 2"). The net proceeds of the Placing will be sufficient to fund the completion of Phase 1, which is expected to double current production, and the preparatory work associated with Phase 2.

Pursuant to the FIA, the Company will acquire a 50 per cent. Participating Interest in the Alfeld-Elze II Licence on the following terms:

-- Initial Consideration of EUR5 million payable in cash by the Company to 5P Energy on completion of the FIA as partial reimbursement of the H-WD Z2 costs;

-- Subject to the A-EZ Z4(2) well achieving commercial production, a cash consideration payment of EUR2 million as partial reimbursement of the A-EZ Z4(2) costs incurred by 5P Energy prior to 1 January 2018;

-- A 100 per cent. carry, up to a maximum of EUR10 million, towards the costs of the drilling, logging, testing and completion of one or more new wells and, if agreed by both Path and 5P Energy, including the acquisition of 3D seismic over the Licence area.

Additional cash payments may become payable if certain milestones are successfully met over a 5-year period following Completion of up to EUR7.25 million payable as follows:

- EUR2.25 million on achievement of cumulative gross gas production of 10bcf;

- EUR3 million on achievement of EUR100 million of cumulative total gross project gas revenues; and

- EUR2 million on achievement of cumulative gross gas production of 40bcf.

Dividend Policy

The Directors intend to commence payment of dividends when it becomes commercially viable to do so, subject to the working capital requirements of the Company and the availability of distributable funds and will adopt a progressive but prudent dividend policy thereafter.

In order to increase the flexibility of paying dividends in future, as soon as practicable following Admission, the Board intends to seek approval for an increase in the distributable reserves of the Company. This increase will be achieved by the cancellation of the Company's share premium account, subject to Shareholder approval and confirmation by the High Court of Justice in England and Wales.

Noting that the effect of the FIA is that Path will be cash generative from completion, it is the Directors' intention that Path should join the dividend list in the first half of 2019.

The Placing

The Placing Shares will, when issued, be credited as fully paid and will rank pari passu with the existing ordinary shares including the right to receive all future dividends and distributions declared, made or paid by reference to a record date falling after the date of their issue. The Company will apply for (i) the Placing Shares and(ii) its existing issued ordinary share capital, to be admitted to trading on AIM ("Admission"). An admission document will be published by Path in due course. The Placing Shares are not being offered or sold in any jurisdiction where it would be unlawful to do so. The allotment of the Placing Shares is not subject to shareholder approval.

Cancellation of Standard Listing

The Company's ordinary shares remain suspended from trading on the Main Market. Cancellation of the listing of the Company's ordinary shares on the Official List is expected to take effect on Admission.

This announcement is inside information for the purposes of Article 7 of Regulation 596/2014.

***S***

For further information:

Path Investments plc

Christopher Theis, Andy Yeo [phone]

Cantor Fitzgerald (Joint Financial Adviser, Broker and Bookrunner)

Nick Tulloch, Pete Malovany [phone]

Shard Capital (Joint Financial Adviser and Broker)

Simon Leathers, Damon Heath [phone]

IFC Advisory (Financial PR & IR)

Tim Metcalfe, Heather Armstrong, Miles Nolan [phone]

Cautionary statement regarding forward-looking statements

Certain statements in this Announcement are forward-looking statements, which are based on the Company's current expectations, intentions and projections regarding its future performance, anticipated events or trends and other matters that are not historical facts. These forward-looking statements and words of similar meaning or the negative thereof, include all matters that are not historical facts and reflect the directors' beliefs and expectations and involve a number of risks, assumptions and uncertainties that could cause actual results and performance to differ materially from any expected future results or performance expressed or implied by the forward-looking statements. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Statements contained in this Announcement regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future.

Given these risks and uncertainties, prospective investors are cautioned not to place undue reliance on forward-looking statements. Except as required by applicable law, neither the Company nor its advisers assumes any responsibility or obligation to update or revise publicly or review any of the forward-looking statements contained herein, whether as a result of new information, future events or otherwise. You should not place undue reliance on any forward-looking statements, which speak only as of the date of this Announcement.

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July 30, 2018 02:01 ET (06:01 GMT)