Range Resources Limited Proposed Debt Restructuring and Acquisition (1365T)

TIDMRRL

RNS Number : 1365T

Range Resources Limited

18 March 2019

THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY THE COMPANY TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE MARKET ABUSE REGULATIONS (EU) NO. 596/2014 ("MAR"). UPON THE PUBLICATION OF THIS ANNOUNCEMENT VIA REGULATORY INFORMATION SERVICE ("RIS"), THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

PROPOSED DEBT RESTRUCTURING AND ACQUISITION

Range, an international company with oil and gas projects and oilfield service businesses in Trinidad and Indonesia, is pleased to announce a comprehensive restructuring of the various payment obligations with LandOcean Energy Services Co., Ltd. ("LandOcean") (the "Proposed Debt Restructuring").

Key Highlights:

   -- Medium term extension agreed to repayment obligations with no payments of principal or interest due until 2022 at 
      the earliest; 
 
   -- US$20 million convertible note extended for a new 3-year term with interest payments only due for repayment at 
      maturity in November 2022. Revised conversion price at a 267% premium to current share price; 
 
   -- Reduction in overall outstanding debt of over 20% by a repayment of US$19.7 million of the outstanding balance 
      through issuance of new shares; 
 
   -- Refundable deposit of US$2.8 million paid by Range to LandOcean in December 2017 will be utilised in permanent 
      payment towards the outstanding consideration for RRDSL acquisition.  The remaining consideration will be 
      extended for a further 3-year period; 
 
   -- The completion of the Proposed Debt Restructuring is subject to approval by Range shareholders, approval by 
      LandOcean shareholders (if required) and the completion of a proposed new acquisition; 
 
   -- The Board has identified a transformational acquisition opportunity to acquire a 49% interest in a pre-school 
      education business operating in China, with due diligence process currently underway (the "Proposed 
      Acquisition"); 
 
   -- The Proposed Acquisition, if completed, would constitute a reverse takeover under Rule 14 of the AIM Rules that 
      will be subject to a vote of the Company's shareholders and relevant regulatory approvals; and 
 
   -- The Company has requested a suspension of trading in its shares on AIM and ASX with immediate effect pending the 
      publication of an admission document. 

Range's Chairman, Kerry Gu, commented:

"We are delighted to have successfully renegotiated our payment obligations with LandOcean and to have secured extension of repayments until 2022 at the earliest. This was our key objective for 2019 and this is an important step for the Company in stabilizing the balance sheet position and positing the business towards growth. I would like to thank both LandOcean and my fellow shareholders for their continued support during this process.

Moreover, we are particularly excited with a potentially transformational acquisition opportunity and I look forward to sharing further details with our shareholders in due course. We will also be undertaking a review of the oil and gas business.

Upon completion of the Proposed Debt Restructuring and the Proposed Acquisition, the Company will have a reduced debt burden, improved working capital and liquidity position and an ability to progress with new opportunities."

Proposed Debt Restructuring

As noted in the half-yearly report and accounts released today, the total balance due to LandOcean at 31 December 2018 was approximately US$89 million and comprises the following four main elements:

   -- Convertible Note of US$20.0 million ("Convertible Note"); 
 
   -- Purchase orders related to the Integrated Master Services Agreement of US$39.8 million (plus accrued interest of 
      US$3.4 million) ("IMSA payments"); 
 
   -- RRDSL acquisition net consideration of US$0.4 million (plus accrued interest of US$0.1 million) ("RRDSL 
      Consideration"); and 
 
   -- RRDSL loan balance with LandOcean group companies of US$15.6 million (plus accrued interest of US$9.5 million) 
      ("RRDSL Loans"). 

The outcome of the Proposed Debt Restructuring for each element is as follows:

 
 Convertible Note 
                         *    New maturity date of 3 years after all conditions 
                              precedent are satisfied 
 
 
                         *    Interest will now be paid at maturity (including the 
                              interest accrued under existing note for 2019) 
 
 
                         *    Conversion price of 0.11p per note 
 IMSA Payments 
                         *    Term for repayment extended to April 2023 
 
 
                         *    Interest rate unchanged at 6% pa (interest payable at 
                              final payment date) 
                      ------------------------------------------------------------- 
 RRDSL Consideration 
                         *    US$2.8 million refundable deposit will be allocated 
                              permanently towards the Consideration and will not be 
                              refunded to Range 
 
 
                         *    Remaining net consideration due of US$0.4million will 
                              be extended by a further 3 years to November 2023 
 
 
                         *    Interest will continue to accrue on the unpaid 
                              consideration at rate of 6% pa (payable at same time 
                              as the consideration) 
                      ------------------------------------------------------------- 
 RRDSL Loans 
                         *    US$19.7 million of the outstanding amount is to be 
                              repaid through the issue of new shares in the Company 
 
 
                         *    The Shares will be issued at the volume weighted 
                              average price (VWAP) on the Australian Stock Exchange 
                              for the 90-day trading period prior to the date of 
                              issue 
 
 
                         *    Repayment of the remaining amount of the RRDSL Loans 
                              will be extended for a further 3-year period to 
                              November 2023 with annual interest of 6% payable upon 
                              final repayment date 
                      ------------------------------------------------------------- 
 

The Proposed Debt Restructuring is subject to satisfaction (or waiver) of the following conditions:

1. Shareholder approval of the proposed issuance of shares to LandOcean (and any other required shareholder approvals to affect the Proposed Debt Restructuring) at a General Meeting of the Company (expected to be held in Q3 2019);

   2.   Approval by LandOcean shareholders (if required); and 

3. Completion of the Proposed Acquisition which is expected to require approval by the Company's shareholders.

Further details will be provided in the Notice of Meeting of the Company and an Independent Expert's Report which will accompany the Notice of Meeting. The long-stop date detailed in the Proposed Debt Restructuring agreements for all conditions to be satisfied is 31 December 2019 and LandOcean has agreed that Range has no obligation to make any payments of principal or interest during that time.

Proposed Acquisition

The Proposed Debt Restructuring is conditional on the Company completing an identified acquisition on or before the end of 2019. The Board has identified what it considers to be a transformational acquisition opportunity to acquire a 49% interest in a pre-school education business operating in China. A detailed legal, financial and commercial due diligence process is currently underway. Range expects that the due diligence process will be completed during April 2019 and full details will be provided to shareholders upon the signing of any binding agreements.

The Proposed Acquisition, if completed, would constitute a reverse takeover under Rule 14 of the AIM Rules. Admission to trading on AIM of the Company as enlarged by the Proposed Acquisition would require publication of an Admission Document and would be subject to a vote of the Company's shareholders.

The Company has requested a suspension of trading in its shares on AIM and ASX with immediate effect pending the publication of an admission document or confirmation by the Company that the Proposed Acquisition is not to proceed. There can be no guarantee that the Proposed Debt Restructuring or the Proposed Acquisition will complete. Further announcements will be made as and when appropriate.

Related Party Transaction

LandOcean is a related party of the Company for the purposes of the AIM Rules by virtue of its status as a substantial shareholder holding 17% of the existing Ordinary Shares. The Directors consider, having consulted with the Company's nominated adviser, Cantor Fitzgerald Europe, that the terms of the Proposed Debt Restructuring are fair and reasonable insofar as the Company's shareholders are concerned.

 
  Contact details 
                                        Cantor Fitzgerald Europe (Nominated 
   Range Resources Limited               Adviser and Broker) 
   Evgenia Bezruchko (Group Corporate    David Porter / Nick Tulloch (Corporate 
   Development Manager)                  Finance) 
   e. [e-mail]         t. [phone] 
   t. [phone] 
 

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March 18, 2019 03:00 ET (07:00 GMT)