Caspian Sunrise PLC

("Caspian Sunrise" or the "Company")

PROPOSED US$6.2 MILLION DEBT CONVERSION

APPROVAL OF WAIVER OF OBLIGATIONS UNDER RULE 9 OF THE CITY CODE ON TAKEOVERS AND MERGERS

AND

NOTICE OF GENERAL MEETING

Caspian Sunrise, the Kazakhstan based oil and gas exploration and production company, is pleased to announce that it will shortly be posting to Shareholders a Circular regarding a proposed Debt Conversion in respect of the Company's Oraziman Family Loan of approximately US$6.2m, first announced in August 2021. 

The Independent Directors have, subject to Independent Caspian Sunrise Shareholder approval and regulatory consent, agreed to convert the Oraziman Family loan of approximately US$6.2m into 139,729,446 Ordinary Shares in the Company to be issued to Aibek Oraziman and Aidana Urazimanova pursuant to the Debt Conversion, as detailed below.

This will result in the Oraziman Family Concert Party shareholding increasing from 45% to 48.41%.

Clive Carver, Chairman commented

"On completion of the Debt Conversion the Group will be free of debt and therefore better placed to further develop the Group's assets and to commence dividend payments."

Caspian Sunrise PLC

Clive Carver

Chairman                                                                                 +7 727 375 0202

WH Ireland, Nominated Adviser & Broker

James Joyce                                                                            +44 (0) 207 220 1666

Andrew de Andrade

This announcement has been posted to:

www.caspiansunrise.com/investors

The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulation (EU) No. 596/2014.

The Circular will be made available on the Company's website at www.caspiansunrise.com .

Extracts from the Circular are included below:

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Publication of this Circular and the Notice of General Meeting              15 February 2022

Latest time and date for receipt of Forms of Proxy                                       7 March 2022

General Meeting                                                                                           9 March 2022

Completion of the Debt Conversion                                                              9 March 2022

Admission of the Conversion Shares and commencement of dealing in    15 March 2022

such shares on AIM                  

Notes:

1.         The times and dates set out in this document that fall after the date of this document are based on the Company's current expectations and are subject to change.

2.         The timetable assumes that there is no adjournment of the General Meeting. If the date scheduled for the General Meeting changes, the revised date and / or time will be notified to Shareholders by a further Shareholder letter.

3.         All times shown are London times unless otherwise stated.

STATISTICS

*These figures set out the maximum Conversion Shares to be issued on the assumption that (i) the Waiver Resolution contained within this Circular is passed at the General Meeting and the Debt Conversion completes in accordance with the terms set out in this Circular; and (ii) there are no changes to the share capital of the company between the date of this circular and the date of the conversion of Oraziman Family Loan

** US$ : £ exchange rate for the purposes of calculating consideration payable   US$1.39 : £1.00

Being the prevailing rate at the date on which the conditional Debt Conversion agreement was signed

 
DEFINITIONS

LETTER FROM THE CHAIRMAN

(Incorporated and registered in England & Wales under the Companies Acts 1985 and 1989 registered No. 05966431)

15 February 2022

To Shareholders and, for information purposes only, to the holders of options under the Caspian Sunrise PLC share option schemes

Dear Sir or Madam

1.     INTRODUCTION

The purpose of this Circular is to:

·      explain the background to and the reasons for the Debt Conversion and associated Waiver Resolution; and

·      explain why the Independent Directors consider the Debt Conversion and Waiver Resolution to be in the best interests of the Company and the Independent Shareholders as a whole and why the Independent Directors unanimously recommend that the Independent Shareholders vote in favour of the Waiver Resolution at the General Meeting.

The Debt Conversion is the conversion of approximately US$6.2 million of debt due to the Oraziman Family Concert Party by the Company and other members of the Group, into new Ordinary Shares in the capital of the Company to be issued to Aibek Oraziman and Aidana Urazimanova and the associated Waiver Resolution which, if approved would waive the obligation under Rule 9 of the Takeover Code for the Oraziman Family Concert Party Concert Party or any member of the Oraziman Family Concert Party to make a general offer to Shareholders as a result of the allotment and issue to it of the Conversion Shares.

In the event that the Waiver Resolution is passed and the Debt Conversion is completed, the aggregate shareholding of the Oraziman Family Concert Party in Caspian Sunrise will increase from its current level of approximately 45.00% (comprising 949,815,346 Ordinary Shares) to 48.41% (comprising 1,089,544,792 Ordinary Shares) of the Enlarged Share Capital.

The Panel has, subject to the approval of Independent Shareholders of the Waiver Resolution, agreed to a waiver of the obligations that would otherwise arise on the Oraziman family Concert Party to make a mandatory offer under Rule 9 of the Takeover Code (commonly referred to as a "whitewash"), as further detailed in this document.

Reasons to vote in favour of the Proposals

The Board wishes to start making regular dividend payments. This would not only reward long term shareholders but is also likely to attract investors for whom regular dividend payments are an important investment criterion.

As the Group's business matures and enters what the Board expects to be a cash generative phase in the Group's development the Board is targeting declaring the first dividend payments in 2022.

The support provided from the Oraziman Family Concert Party in recent years, which was vital in the Company's survival, has left the Group with approximately US$6.2 million of short-term debt, repayable on demand.

The Directors would deem it imprudent to commence dividend payments with US$6.2 million of debt repayable on demand. Approval of the Debt Conversion will both eliminate the US$6.2 million debt and remove a future obstacle to dividends. On 6 August 2021, the Company announced it had agreed with the Oraziman Family Concert Party, conditional on approval of the Waiver Resolution, to convert the Oraziman Family Loan owed by the Group, which is repayable on demand into 139,729,446 at a price of 3.2p per share, which was a 12.50% premium to the market price at the time.

The conversion of this debt into new Ordinary Shares, is regarded as a Related Party Transaction.

Independent Shareholders are being asked to approve the Waiver Resolution to waive the requirement that would otherwise arise on the Oraziman Family Concert Party, in converting the Oraziman Family Loan, to make a general offer for the Company under Rule 9 of the Takeover Code.

The Oraziman Family Concert Party have supported the Group in recent years when other sources of funding have not been available. The Loan has grown steadily to the point that it would take a very significant part of the Group's operational income to repay.

Should Independent Shareholders not approve the Debt Conversion, funds that would have been available for further development of the Group's assets would instead be diverted to repay the Loan and the commencement of dividend payments would be delayed until such time as sufficient distributable reserves were created.

Concentration of ownership

Following completion of the Debt Conversion the Oraziman Family Concert Party would increase their aggregate holding in the Company from 949,815,346 Ordinary Shares (45.00% of the Issued Ordinary Shares) to 1,089,544,792 Ordinary Shares (48.41% of the Enlarged Share Capital).

The Independent Directors do not consider that this concentration of ownership materially changes the control which the Oraziman Family Concert Party could already exert on the Company and do not believe it will be detrimental to the future of the Company.

Further, the Company already has in place a formal relationship agreement with the Oraziman Family Concert Party to prevent its use of their controlling stake against the interest of Shareholders generally, including Independent Shareholders. Further details of the relationship agreement are set out in the "Relationship Agreement" paragraph below in Part II of this Circular.

The Wider Concert Party, which includes the Oraziman Family Concert Party, currently holds 1,321,188,992 Ordinary Shares (representing 62.59% of the Issued Ordinary Shares) which would increase to approximately 1,460,918,437 (Ordinary Shares (representing 64.92% of the Enlarged Share Capital) as a result of the Debt Conversion.

Information on the concert parties

There are two concert parties. The first is the Wider Concert Party, of which the Oraziman Family Concert Party forms part. The Wider Concert Party already holds more than 50% of the Company's voting rights and as such does not require the approval of either the Panel or Independent Shareholders to acquire additional shares.

The second is the Oraziman Family Concert Party, which is a sub concert party of the Wider Concert Party.

For the purposes of the Takeover Code, members of both the Oraziman Family Concert Party and the Wider Concert Party are treated as acting in concert, as defined by the Takeover Code, with regard to their interests in the issued share capital of the Company. Further information on this and the Takeover Code can be found in Part III of this Circular.

BACKGROUND ON THE WIDER CONCERT PARTY

On 29 February 2008, Shareholders approved the acquisition by the Company of 59% of the issued share capital of Eragon, a company with a number of oil and gas assets in Kazakhstan, including the BNG contract area, which is the Company's principal commercial asset. The remaining 41% of the issued share capital of Eragon was then held by Baverstock for the benefit of the original Baverstock Quota holders, the largest of which was Kuat Oraziman, Chief Executive Officer of the Company. Further details of such acquisition are set out in the Company's Admission Document.

The Company subsequently obtained 100% ownership of the share capital of Eragon by way of the reduction of share capital in Eragon, which entailed the cancellation of the whole of the 41% of the issued share capital of Eragon held by Baverstock for the benefit of the Baverstock Quota holders, in consideration of the issue and allotment to Baverstock (for the benefit of the Baverstock Quota holders) of 651,436,544 new Ordinary Shares, thereby giving the Company full operational control and 99% ownership of its principal commercial asset. This transaction united 99% of BNG under the Company's ownership.  Further details of this transaction are set out in the Merger Circular.

The Baverstock Quota holders were treated as acting in concert, as defined by the Takeover Code, with a number of other Shareholders of the Company, including Kuat Oraziman and his family, resulting in the Wider Concert Party as it is currently constituted. The shares in the Company were all subsequently distributed directly to the Baverstock quota holders.

Further information of the transactions which led to the formation of the Wider Concert Party, is included in the following Company circulars:

·              Eragon Acquisition, dated 29 February 2008;

·              Proposed Baverstock Merger dated 27 February 2017;

·              Proposed Acquisition of Caspian Explorer dated 21 January 2020; and

·              the Admission Document

which are available on the Company's website at https://www.caspiansunrise.com.

Kuat Oraziman is treated as acting in concert with his immediate family comprising Aibek Oraziman (adult son), Aidana Urazimanova (adult daughter), Altynbek Boltazhan (nephew) and Boltazhan Kerimbayev (brother-in-law) and the Estate of the late Rafik Oraziman, along with Dae Han New Pharm Co. Ltd, Raushan Sagdiyeva, Dosbol Zholdybayev, Chang Min Seok, Kang Junyoung, , Zhanat Bukenova and Daulet Beisenov.

A brief description of the Wider Concert Party members

Mr Kuat Oraziman is a Kazakh national. Mr Oraziman has nearly 31 years of business experience in Kazakhstan and abroad and nearly 29 years of oil and gas experience in Kazakhstan. Kuat Oraziman's experience has included the operation of import and export businesses, the establishment and operation of an international brewery in Kazakhstan, and the Kazakhstan representative of Phillips and Stork. Since 1991 Kuat Oraziman has been a director of ADA Oil LLP. Kuat Oraziman also holds a doctorate in science and is a trained geologist. He was appointed to the board of Roxi Petroleum as a Non-Executive Director in November 2006, became an Executive Director in 2008 and was appointed Chief Executive Officer in 2012.

Mr Aibek Oraziman is the adult son of Kuat Oraziman. He has more than 12 years oil and gas experience, including 3 years in the field at Aktobe, Kazakhstan working for a local company. He was appointed to the Caspian Sunrise board on 21 August 2020 as a non-executive director and holds approximately 22.4% of the Company's voting rights.

Aidana Urazimanova is the adult daughter of Kuat Oraziman. She holds approximately 17.8% of the Company's voting rights.  She plays no role in the day to day business of the Company.

Altynbek Boltazhan is the adult nephew of Kuat Oraziman. He works in the oil & gas industry in Kazakhstan but not presently for Caspian Sunrise. He holds approximately 1.3% of the Company's voting rights.

Boltazhan Kerimbayev is the brother-in-law of Kuat Oraziman and a Kazakh national. He plays no role in the day to day business of the Company and has no other business connections with Kuat Oraziman.

Dae Han New Pharm Co. Ltd. is a Korean-registered pharmaceutical company. It is listed on the Korean Stock Exchange and has a current market capitalisation of approximately US$130 million.

In the latest financial period for the 12 months to 31 December 2020 Dae Han New Pharm Co. Ltd. reported revenues of ₩150 million, a loss after tax of ₩10 million and net assets of ₩57 million.

Mrs Raushan Sagdiyeva, a Kazakh national. She plays no role in the day to day business of the Group.

Kang Junyoung, is a Korean national and one of the vendors of the Caspian Explorer. He was previously the captain of the Caspian Explorer drilling vessel. He plays no role in the day to day business of the Group.

Mr Dosbol Zholdybayev is a Kazakh national who worked with and for Caspian Sunrise previously.  He plays no role in the day to day business of the Group.

Mr Chang Min Seok, the owner of Cody Star Investment Limited, which is a private company that is registered in the British Virgin Islands, the sole director of which is Haejung Rah. Cody Star was a former quota holder in Baverstock, one of the original investors in the BNG Contract Area.  He plays no role in the day to day business of the Group.

Mrs Zhanat Bukenova is a Kazakh national. She loaned US$500,000 to the Company on 10 October 2010.  Since then she has played no role in the Group's business.

Mr Daulet Beisenov is a Kazakh national. Mr Beisenov has nearly 31 years of business experience in Kazakhstan and abroad. Mr Beisenov's experience has included the operation of import and export businesses and the establishment and operation of service orientated businesses including various hotels and restaurants, much of which was together with Mr Kuat Oraziman. He plays no role in day to day business of the Group.

The following table sets out the members of the Wider Concert Party and their respective holdings in Caspian Sunrise PLC.

Other than as disclosed above, there are no further relationships (personal, financial and commercial), arrangements and understandings between Wider Concert Party members or the directors of the Company.
 

Notes:

The currently held Ordinary Shares noted in the table above held by the various members of the Oraziman Family Concert Party are held beneficially by the family member concerned. The underlying shareholdings are managed by Akku Investments, a Kazakh entity with Kuat Oraziman as the sole director and decision maker. 100,021,432 Conversion Shares will be issued to Akku Investments and 19,854,007 and 19,854,007 will be issued directly to Aibek Oraziman and Aidana Urazimanova respectively.  Aibek Oraziman and Aidana Urazimanova are the sole beneficiaries of Akku Investments and own the Ordinary Shares of Akku Investments equally.

Kuat Oraziman also holds 3,000,000 options over Ordinary Shares.

A full breakdown of rights to subscribe held by the Directors of Caspian Sunrise PLC is included in Part III of this Circular in Paragraph 3 entitled: "Interests and Dealings".

Under Rule 9 of the Takeover Code, any person who acquires an interest (as such term is defined in the Takeover Code) in shares which, taken together with the shares in which he and persons acting in concert with him are interested, carry 30% or more of the voting rights in a company which is subject to the Takeover Code, is normally required to make a general offer to all of the remaining shareholders to acquire their shares. Similarly, when any person, together with persons acting in concert with him, is interested in shares which in aggregate carry not less than 30% of the voting rights but does not hold shares carrying more than 50% of the voting rights of such a company, a general offer will normally be required if any further interests in shares are acquired by any such person. These limits apply to the entire concert party as well as the total beneficial holdings of individual members. Such an offer would have to be made in cash at a price not less than the highest price paid by him, or by any member of the group of persons acting in concert with him, for any interest in shares in the Company during the 12 months prior to the announcement of the offer.

Prior to and upon completion of the Debt Conversion, the Oraziman Family Concert Party will be interested in Ordinary Shares carrying more than 30% of the company's voting rights but will hold less than 50% of the Company's voting share capital, and, for as long as members continue to be treated as acting in concert a general offer will normally be required if any further interest in shares is acquired by any members of the Oraziman Family Concert Party, or any person acting in concert with it. The individual members of the Oraziman Family Concert Party will not be able to increase their percentage interests in shares through or between a Rule 9 threshold without Panel consent.

Prior to and upon completion of the Debt Conversion and issue of the Conversion Shares, the Wider Concert Party will hold more than 50% of the Company's voting share capital, and, for as long as it continues to be treated as acting in concert, any further increase in that aggregate interest in shares by the Wider Concert Party will not be subject to the provisions of Rule 9 of the Takeover Code, although individual members of the Wider Concert Party and the Oraziman Family Concert Party will not be able to increase their percentage interests in shares through or between a Rule 9 threshold without Panel consent.

The Panel has agreed, subject to the Waiver Resolution being passed on a poll by the Independent Shareholders at the General Meeting, to waive the requirement under Rule 9 of the Takeover Code for the Oraziman Family Concert Party to make a mandatory offer for the Ordinary Shares they do not already own, as would otherwise arise from the issue of further shares in the Company pursuant to the Debt Conversion. The Wider Concert Party, of which the Oraziman Family Concert Party is part, will be disenfranchised from voting on the Waiver Resolution and have undertaken to the Company not to vote on the Waiver Resolution.

In the event that the Waiver Resolution is approved at the General Meeting, neither the Oraziman Family Concert Party, the Wider Concert Party nor any of their respective connected persons or other persons acting in concert with it will be restricted from making an offer for the Company.

Relationship Agreement

On 20 January 2020, the Company and the members of the Oraziman Family Concert Party other than Altynbek Boltazhan and Boltazhan Kerimbayev entered into a relationship agreement pursuant to which those members of the Oraziman Family Concert Party undertook to the Company and WH Ireland, in or acting in their capacities as Shareholders and not in any other capacity that they would use the voting powers attaching to the shares held by them, amongst other things, to ensure no directors are appointed or removed without the consent of the board, ensure the board comprises at least 2 independent directors and to ensure that any committee of the board of the Company is comprised of a majority of Independent Directors.

On 10 February 2022, Altynbek Boltazhan & Boltazhan Kerimbayev signed the Relationship Agreement.

Each member of the Oraziman Family Concert Party also agreed not to do anything that would have the effect of preventing the Company from complying with the AIM Rules or other applicable laws or seek to cancel the admission of the Ordinary Shares to trading on AIM. Further, transactions between the Company and any member of the Oraziman Family Concert Party, in or acting in their capacities as Shareholders and not in any other capacity must be approved by a majority of Independent Directors.  The relationship agreement, as amended, will be effective from the Admission of the Conversion Shares until such time as the Oraziman Family Concert Party ceases to hold, in aggregate, 20 per cent. or more of the aggregate voting rights in the Company. The relationship agreement is governed by English law and the courts of England have exclusive jurisdiction to settle any dispute arising in connection with the relationship agreement.

Waiver of the obligation to make a mandatory offer under Rule 9 of the Takeover Code

The Panel has agreed, subject to the Waiver Resolution being passed on a poll by the Independent Shareholders at the General Meeting, to waive the requirement under Rule 9 of the Takeover Code for the Oraziman Family Concert Party to make a mandatory offer for the Ordinary Shares they do not already own, which would otherwise arise as a result of the issue of the Conversion Shares. The Wider Concert Party, of which the Oraziman Family Concert Party is part, will be disenfranchised from voting on the Waiver Resolution and have undertaken to the Company not to vote on the Waiver Resolution.

Related Party Transactions

The Debt Conversion is considered a Related Party Transaction pursuant to the AIM Rules for Companies.

The Independent Directors consider, having consulted with WH Ireland, that the terms of the proposed Debt Conversion are fair and reasonable insofar as shareholders of Caspian Sunrise and the Company are concerned.

Existing authorities to allot new Ordinary Shares

The Company will satisfy the consideration payable for the Debt Conversion by the issue of, in aggregate, 139,729,446 new Ordinary Shares, which would be issued to Aibek Oraziman and Aidana Urazimanova, members of the Oraziman Family Concert Party.

The Company will issue and allot the Conversion Shares under the existing authorities and powers granted by Shareholders at the AGM, and accordingly no specific authorisation or disapplication of pre-emption rights is being sought at the General Meeting in connection with such share issuance.

2.     GENERAL MEETING

You will find set out at the end of this Circular the Notice convening the General Meeting to be held at the offices of Taylor Wessing LLP, 5 New Street Square, London EC4A 3TW at 11:00a.m. on 9 March 2022, at which the Waiver Resolution will be proposed.

Waiver Resolution

The Waiver Resolution required in order for the Debt Conversion to proceed. It will be proposed as an ordinary resolution to be voted on a poll by Independent Shareholders only in accordance with the requirements of the Panel.

Approval of the Waiver Resolution would waive the obligation under Rule 9 of the Takeover Code for the Oraziman Family Concert Party or any member of the Oraziman Family Concert Party to make a general offer to Shareholders as a result of the allotment and issue to it of the Conversion Shares.

All Shareholders may attend the General Meeting. The Oraziman Family Concert Party members and the Wider Concert Party members will not be permitted to vote on the Waiver Resolution. 

3.     ACTION TO BE TAKEN

A Form of Proxy for use in connection with the General Meeting is enclosed. Whether or not you intend to attend the General Meeting, it is important, particularly in view of the fact that the Waiver Resolution to be put to the General Meeting will be determined by a poll of Independent Shareholders, that you duly complete, execute and return the enclosed Form of Proxy, by hand or by post, to Link Group, PXS 1, 10th Floor, 29 Wellington Street, Leeds, LS1 4DL in accordance with the instructions printed thereon. To be valid, the completed Form of Proxy must be returned as soon as possible and, in any event, so as to arrive not less than 48 hours before the time for holding the General Meeting. Completion and return of the Form of Proxy will not prevent Shareholders from attending and voting at the General Meeting in person should they wish to do so.

Admission, Settlement, Dealing and Total Voting Rights

It is expected that Admission of the Conversion Shares will become effective and that dealings in the Conversion Shares will commence on 15 March 2022, conditional on, and subsequent to, the passing of the Waiver Resolution.

The Conversion Shares, when issued, will rank pari passu in all respects with the Existing Ordinary Shares. The total number of Ordinary Shares in issue following the issue of the Conversion Shares will be 2,250,501,560.

The Company has no shares in treasury, therefore (subject to any further share issuance prior to Admission in respect of all of such shares) this figure may be used by Shareholders, from Admission in respect of all of such shares, as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FCA's Disclosure Guidance and Transparency Rules.

4.     RECOMMENDATION
 

The Takeover Code requires the Independent Directors to obtain competent independent advice regarding the merits of the Debt Conversion and the associated Waiver Resolution. Accordingly, WH Ireland has provided formal advice to the Independent Directors regarding the Debt Conversion and associated Waiver Resolution. WH Ireland confirms that it, and any person who is or is presumed to be acting in concert with it, is independent of the Oraziman Family Concert Party and the Wider Concert Party and has no personal, financial or commercial relationship or arrangements or understandings with either the Oraziman Family Concert Party or the Wider Concert Party which it believes would compromise its independence.

The Independent Directors, who have been so advised by WH Ireland, consider the Debt Conversion and associated Waiver Resolution to be fair and reasonable and in the best interests of the Independent Shareholders and the Company as a whole. In providing advice to the Independent Directors, WH Ireland has taken into account the Independent Directors' commercial assessments of the Debt Conversion and associated Waiver Resolution. Kuat Oraziman and Aibek Oraziman, being Directors of the Company who are also included in the Oraziman Family Concert Party and the Wider Concert Party, are not considered to be Independent Directors and therefore are not included in the Board recommendation relating to the Debt Conversion and associated Waiver Resolution.

Accordingly, the Independent Directors unanimously recommend that Independent Shareholders vote in favour of the Waiver Resolution, at the General Meeting as they intend to do in respect of their entire holdings which amount to 10,156,583 Ordinary Shares (representing approximately 0.48 per cent. of the Issued Ordinary Shares).

Yours faithfully

Clive Carver

Chairman

ADDITIONAL INFORMATION

1.         RESPONSIBILITY

1.1        Each of the Directors, whose names appear in paragraph 2 below, accepts responsibility for the information (including any expressions of opinions) contained in this Circular, save for the Waiver Resolution recommendation of the Independent Directors set out in Part II in paragraph 4 entitled "Recommendation", for which the Independent Directors are solely responsible and save for any information relating to the Oraziman Family Concert Party and the Wider Concert Party, the intentions of the Oraziman Family Concert Party and the Wider Concert Party, for which responsibility is accepted on the basis set out in paragraph 1.2 below. To the best of the knowledge and belief of the Directors (who have taken all reasonable care to ensure that such is the case) the information contained in this Circular is in accordance with the facts and does not omit anything likely to affect the import of such information.

1.2        Each of the Independent Directors, accepts responsibility for the Waiver Resolution recommendation of the Independent Directors set out in Part II in paragraph 4 entitled "Recommendation", for which the Independent Directors are solely responsible. To the best of the knowledge and belief of the Independent Directors (who have taken all reasonable care to ensure that such is the case) the information contained in the Waiver Resolution recommendation is in accordance with the facts and does not omit anything likely to affect the import of such information.

1.3        The members of the Oraziman Family Concert Party and the Wider Concert Party, whose names appear in Part II of this document accept responsibility for the information (including any expressions of opinions) contained in this Circular relating to themselves. To the best of the knowledge and belief of the members of the Oraziman Family Concert Party and members of the Wider Concert Party, who have taken all reasonable care to ensure that such is the case, the information contained in this Circular for which they are responsible is in accordance with the facts and does not omit anything likely to affect the import of such information.

2.         THE DIRECTORS OF CASPIAN SUNRISE PLC

The current Directors of Caspian Sunrise PLC are:

Clive Carver                              Chairman

Kuat Oraziman                           Chief Executive Officer

Seokwoo Shin                           Chief Operating Officer

Edmund Limerick                     Senior Non-executive director

Aibek Oraziman                         Non-executive director

3.         INTERESTS AND DEALINGS

3.1        Definitions

For the purposes of this Part III and Part IV, the following definitions shall apply

(a) "acting in concert" has the meaning attributed to it in the Takeover Code;

(b) "arrangement" includes any indemnity or option arrangements, or any agreement or understanding, formal or informal, of whatever nature, relating to the relevant securities which may be an inducement to deal or refrain from dealing;

(c) "associate" includes (without limitation) in relation to a company:

(i) its parent, subsidiaries and fellow subsidiaries, its associated companies and companies of which any such companies are associated companies (for this purpose ownership or control of 20 per cent. or more of the equity share capital of a company is regarded as the test of associated company status);

(ii) its connected advisers (as defined in the Takeover Code) or the connected advisers to a company covered in (i) above, including persons (other than exempt principal traders or exempt fund managers) controlling, controlled by or under the same control as such connected advisers;

(iii) its directors (together with their close relatives and related trusts);

(iv) its pension funds or the pension funds of a company covered in (i) above; and

(v) its employee benefit trusts or those of a company covered in (i) above;

(d) "borrowed or lent" includes for these purposes any financial collateral arrangement of the kind referred to in Note 4 on Rule 4.6 of the Takeover Code, but excludes any borrowed Ordinary Shares which have either been redelivered or accepted for redelivery;

(e) "connected persons" means in relation to a director, those persons whose interests in Ordinary Shares the director would be required to disclose pursuant to Part 22 of the Companies Act and related regulations and includes any spouse, civil partner, infants (including step children), relevant trusts and any company in which a director holds at least 20 per cent. of its voting capital;

(f) "dealing" or "dealt" includes:

(i) acquiring or disposing of relevant securities, of the right (whether conditional or absolute) to exercise or direct the exercise of the voting rights attaching to relevant securities, or of general control of relevant securities;

(ii) taking, granting, acquiring, disposing of, entering into, closing out, terminating, exercising (by either party) or varying an option (including a traded option contract) in respect of any relevant securities;

(iii) subscribing or agreeing to subscribe for relevant securities (whether in respect of new or existing securities);

(iv) exercising or converting, whether in respect of new or existing relevant securities, any relevant securities carrying conversion or subscription rights;

(v) acquiring, disposing of, entering into, closing out, exercising (by either party) of any rights under, or varying, a derivative referenced, directly or indirectly, to relevant securities;

(vi) entering into, terminating or varying the terms of any agreement to purchase or sell relevant securities;

(vii) redeeming or purchasing, or taking or exercising an option over, any of its own relevant securities by the offeree company or an offeror; and

(viii) any other action resulting, or which may result, in an increase or decrease in the number of relevant securities in which a person is interested or in respect of which he has a short position;

(g) a person having an "interest" in relevant securities includes where a person:

(i) owns securities;

(ii) has the right (whether conditional or absolute) to exercise or direct the exercise of the voting rights attaching to securities or has general control of them;

(iii) by virtue of any agreement to purchase, option or derivative, has the right or option to acquire securities or call for their delivery or is under an obligation to take delivery of them, whether the right, option or obligation is conditional or absolute and whether it is in the money or otherwise; or

(iv) is party to any derivative whose value is determined by reference to the prices of securities and which results, or may result, in his having a long position in them;

(h) "relevant securities" includes:

(i) securities of an offeree company which are being offered for or which carry voting rights;

(ii) equity share capital of the offeree company and an offeror;

(iii) securities of an offeror which carry substantially the same rights as any to be issued as consideration for the offer; and

(iv) securities of an offeree company and an offeror carrying conversion or subscription rights into any of the foregoing.

(i) ''short position'' means any short position (whether conditional or absolute and whether in the money or otherwise) including any short position under a derivative, any agreement to sell or any delivery obligation or right to require any other person to purchase or take delivery.

3.2       Interests and dealings of the directors of the Company

The interests of each of the Directors in the ordinary share capital of the Company (all of which are beneficial), and the existence of which is known to the Directors or could with reasonable diligence be ascertained by them as at 11 February 2022 (being the latest practicable date prior to the publication of this Circular) are set out below:

The current interests of the Directors in share options agreements are as follows:

On 26 November 2021 the Board, other than Clive Carver, agreed to extend the exercise date of options held by Clive Carver over 2,400,000 Ordinary Shares exercisable at 4p per share from 14 December 2021 to 14 December 2023.

On 10 January 2022 the Company issued 2,500,000 options to Seokwoo Shin and 1,000,000 options to Edmund Limerick exercisable at 5.5p per share and valid until 9 January 2032.

Except as disclosed above, none of the directors of the Company, other than the dealing disclosed in 3.3 below, have dealt in relevant securities of the Company in the 12 months prior to publication of this Circular.

3.3        Interests and Dealings of both the Oraziman Family Concert Party and the Wider Concert Party

Dealings by members of the Oraziman Family Concert Party members within the last 12 months prior to publication of this Circular are as follows:

On 6 August 2021, Kuat Oraziman gifted 41,485,330 Ordinary Shares equally to Aibek Oraziman and Aidana Urazimanova, accordingly Kuat Oraziman no longer holds any Ordinary Shares in the Company.

On 19 January 2022, Kairat Satylganov, previously a member of the Wider Concert Party, sold all his 221,625,001 shares at a price of 4.2p per share as follows: 73,875,001 to Alyazeyah Ahmed Al Marri, 73,875,000 to Meera Ahmed Al Marri and 73,875,000 to Hamda Ahmed Al Marri. None of the buyers are members of the Wider Concert Party. Upon the sale of Kairat Satylganov's shares he was removed from the Wider Concert Party.

Other than as disclosed immediately above, there have been no other dealings by the Oraziman Family Concert Party members within the last 12 months.

Notwithstanding that the acquisition of voting shares (in this case, as a result of the Debt Conversion) is made conditional upon the prior approval of a majority of the Company's Shareholders independent of the transaction at a general meeting of the Company the Panel will not normally waive an obligation under Rule 9 if the person to whom the new securities are to be issued (in this case members of the Oraziman Family Concert Party), or any person acting in concert with it, has acquired any interest in shares in the Company in the 12 months preceding the date of this document but subsequent to negotiations, discussions or the reaching of understandings or agreements with the directors of the Company in relation to the proposed issue of new securities. In addition, the waiver will be invalidated if any such acquisitions of interests in shares are made in the period between the publication of this document and the General Meeting.

The Panel has considered the transactions detailed above and, in these specific circumstances, has confirmed that the dealings by the Oraziman Family Concert Party members detailed above will not prejudice the grant of the Waiver.

Save as disclosed in paragraph 3 of this Part III of this document, no member of the Oraziman Family Concert Party or Wider Concert Party, nor any close relatives, related trusts or connected persons, nor any person acting in concert with any member of the Oraziman Concert Party or Wider Concert Party owns or controls or is interested, directly or indirectly in, or has borrowed or lent (save for any borrowed securities which have either been on-lent or sold), has rights to subscribe for, or has any short position (whether conditional or absolute and whether in the money or otherwise), including any short position under a derivative, any agreement to sell or any delivery obligation or right to require another person to purchase or take delivery in, any relevant securities of the Company, nor has any such person dealt therein during the 12 month period prior to the publication of this Circular.

Save as disclosed in paragraph 3 of this Part III of this document, neither any of the Directors nor any of their close relatives or related trusts (so far as the Directors are aware having made due enquiry) nor any person acting in concert with the Company is interested, directly or indirectly, has rights to subscribe to, or has any short position in relevant securities of the Company, nor has any such person dealt therein during the 12 month period prior to the publication of this Circular.

Neither the Company, the Directors, nor any person acting in concert with the Company has borrowed or lent any relevant securities (save for any borrowed securities which have either been redelivered or accepted for redelivery).

There is no arrangement relating to relevant securities which exists between any member of the Oraziman Concert Party or Wider Concert Party, or their respective groups or, so far as the members of the Oraziman Concert Party and Wider Concert Party are aware, any person acting in concert with any member of the Concert Party or their respective groups, and any other person, nor between the Company or, so far as Company is aware, any person acting in concert with the Company and any other person.

4.         INTENTIONS OF THE ORAZIMAN FAMILY CONCERT PARTY

The current aggregate holding of the Oraziman Family Concert Party is 949,815,346 Ordinary Shares representing 45.00% of the Issued Ordinary Shares. The current aggregate holding of the Wider Concert Party is 1,321,188,992 Ordinary Shares representing 62.59% of the Issued Ordinary Shares.

The Oraziman Family Concert Party, as part of the Wider Concert Party, is not intending to seek any changes to the Board and have confirmed that it would be their intention that, following any increase in their proportionate shareholding as a result of the issue of the Conversion Shares, the business of the Group would be continued in the same manner as at present, with no changes. As a result, there will be no repercussions on employment or the location of Caspian Sunrise's places of business and no redeployment of Caspian Sunrise's existing fixed assets. Likewise, no changes will be made regarding the Company's place of business or headquarters and headquarters' functions.

The Oraziman Family Concert Party has confirmed that it is not intending to seek any changes in respect of: (i) the future business of the Company (including any research and development functions) (ii) the Board, nor the Company's plans with respect to the continued employment of employees and management of the Company and its subsidiaries or their headcount (including to the conditions of employment or in the balance of skills and functions of employees and management); (iii) the strategic plans for the Company and their likely repercussions on employment and on the locations of the Company's place of business, including the location of the Company's headquarters and headquarters functions; (iv) employer contributions into any of the Company's pension schemes, the accrual of benefits for existing members, nor the admission of new members; (v) redeployment of the Company's fixed assets; or (vi) the maintenance of the Company's Ordinary Shares being admitted to trading on AIM.

The Independent Directors believe and have considered as part of forming their recommendation to vote in favour of the Waiver Resolution as stated in Part II Paragraph 4 of this circular, that the Debt Conversion will not result in any changes in respect of: (i) the future business of the Company (including any research and development functions) (ii) the Board, nor the Company's plans with respect to the continued employment of employees and management of the Company and its subsidiaries or their headcount (including to the conditions of employment or in the balance of skills and functions of employees and management); (iii) the strategic plans for the Company and their likely repercussions on employment and on the locations of the Company's place of business, including the location of the Company's headquarters and headquarters functions; (iv) employer contributions into any of the Company's pension schemes, the accrual of benefits for existing members, nor the admission of new members; (v) redeployment of the Company's fixed assets; or (vi) the maintenance of the Company's Ordinary Shares being admitted to trading on AIM.

5.         OPERATIONAL STATUS AND CURRENT TRADING

Caspian Sunrise is a Kazakhstan based oil and gas exploration and production company established in October 2006 and listed on the Alternative Investment Market of the London Stock Exchange in May 2007. Caspian Sunrise's current principal asset is its 99% interest in the BNG Contract Area in the Pre Caspian basin in Western Kazakhstan. Additionally, Caspian has interests in the 3A Best Contract Area and owns the Caspian Explorer, a shallow water drilling vessel designed for use in the Caspian Sea.

The latest operational update was issued by the Company on 25 January 2022 and can be found at https://www.caspiansunrise.com/investors/announcements-alerts/ and is discussed further in Part III paragraph 8.5.

6.         DIRECTORS' SERVICE AGREEMENTS

6.1        Details of the service contracts for the Board of Caspian Sunrise PLC are as follows:

(a)        Clive Carver

Clive Carver entered into a service agreement dated 20 March 2019 in connection with his relocation to the UAE.

Under the terms of the agreement following the date of the grant of the MJF Export licence, Clive has been paid at the rate of US$504,000 per annum. He is also eligible to receive an annual performance related bonus which will be determined at the discretion of the Company's remuneration committee. Clive is entitled to be covered by a policy of directors' and officers' liability insurance to be provided by the Company.

However, from May 2020 Clive has agreed to limit his monthly remuneration to US$10,000.

Additionally, Clive is entitled to receive the ex-pat benefit of a contribution towards housing costs and the use of a car which is unquantified in the agreement.

Clive's service agreement has a rolling term 12-month notice period.

There are no profit sharing arrangements, early termination payments, and incentive payments in relation to the Waiver Resolution or any other arrangements to be disclosed.

(b)        Kuat Oraziman

On 6 December 2019, Kuat Oraziman's base pay was increased to US$300,000 per annum under a variation to his existing service agreement dated 19 June 2018. He is also eligible to receive an annual performance related bonus which will be determined at the discretion of the Company's remuneration committee. Kuat is entitled to be covered by a policy of directors' and officers' liability insurance to be provided by the Company

However, from May 2020 Kuat has agreed to limit his monthly remuneration to US$10,000. Kuat has not received any payments under his Service agreement for several years with the reduced amounts due being added to the Oraziman Family Loan.

Kuat's service agreement has a rolling term12-month notice period.

There are no profit sharing arrangements, early termination payments, and incentive payments in relation to the Waiver Resolution or any other arrangements to be disclosed.

(c)        Seokwoo Shin

Seokwoo Shin was appointed to the board as Chief Operating Officer on 1 December 2020 subject to regulatory confirmation. Under his service agreement he is entitled to receive US$108,000 per annum.

Additionally, he is entitled to receive the ex-pat benefit of a contribution towards housing costs which is unquantified in the agreement.

Seokwoo's service agreement has a rolling term 12-month notice period.

However from May 2020, Mr Shin has agreed to limit his monthly remuneration to US$4,500.

There are no profit sharing arrangements, early termination payments and incentive payments in relation to the Waiver Resolution or any other arrangements to be disclosed.

(d)        Edmund Limerick

Under an agreement dated 28 August 2019, Edmund Limerick is paid a base amount of £45,000 per annum to serve as a non-executive director.  Additionally, he receives two further payments of £5,000 each for chairing the Audit Committee and the Remuneration Committee.

However, from May 2020 Edmund has agreed to limit his annual remuneration to £13,750.

Edmund's contract has a rolling term 6 month notice period.

There are no profit sharing arrangements, early termination payments and incentive payments in relation to the Waiver Resolution or any other arrangements to be disclosed.

(e)        Aibek Oraziman

Under an agreement dated 28 August 2019, Aibek Oraziman is paid a base amount of £45,000 per annum to serve as a non-executive director.

However, from May 2020 Aibek has agreed to limit his annual remuneration to £11,250. Aibek has not received any payments under his Service agreement for several years with the reduced amounts due being added to the Oraziman Family Loan.

Aibek's contract has a rolling term 3 month notice period.

There are no profit sharing arrangements, early termination payments and incentive payments in relation to the Waiver Resolution or any other arrangements to be disclosed.

6.2        Long term incentives

In addition to their service agreements, in May 2019 Clive Carver and Kuat Oraziman became entitled to incentive payments linked to the Company's future share price and market capitalisation, such that for each US$500 million added to the market capitalisation above a base figure of US$300 million and provided the share price for a 30 day period equals or exceeds set share price targets starting at 17.23p should the Company's market capitalisation increase to US$800 million and then increasing by 3.44p for each additional US$500 million increase in the Company's market capitalisation.  In which case both Clive Carver and Kuat Oraziman are entitled to cash pay payments of US$3 million each for each combined market capitalisation and share price thresholds crossed.

None of the above Directors has entered into or amended their service agreements with the Company in the last six months.

7.         MIDDLE MARKET QUOTATIONS

Set out below are the closing middle-market quotations for the Ordinary Shares for the first dealing day of each of the six months immediately preceding the date of this Circular and for 11 February 2022, (being the latest practicable date prior to the publication of this Circular).

8.         GENERAL

8.1        WH Ireland is Caspian Sunrise PLC's Nominated Adviser and Broker and is considered as acting in concert with Caspian Sunrise PLC for the purposes of the Takeover Code and this circular. Kuat Oraziman and Raushan Sagdiyeva have share trading accounts with WH Ireland's wealth management division.

8.2        WH Ireland has given and has not withdrawn its written consent to the issue of this Circular with the inclusion herein of the references to its name and its advice to the Independent Directors in the form and context in which they appear.

8.3        Save as disclosed above, there is no personal, financial or commercial relationship, arrangement or understanding between the Oraziman Family Concert Party, the Wider Concert Party or the Company and WH Ireland.

8.4        There is no agreement, arrangement, or understanding (including any compensation arrangement) between the Oraziman Family Concert Party, the Wider Concert Party or any person acting in concert with any of them and any of the Directors, recent directors, Shareholders, or recent shareholders of the Company, or any person interested or recently interested in Ordinary Shares of the Company having any connection with or dependence upon the proposals set out in this Circular.

8.5        There has been no significant change in the financial or trading position of Caspian Sunrise PLC since the publication of the Company's interim results for the period ended 30 June 2021 save as set out in Regulatory News Service announcements below.

On 6 January 2022 the Company announced that  "The Company notes the current political unrest in Kazakhstan and the anti-government protests. The Company has decided to temporarily suspend its drilling and production activities in response to the ongoing political uncertainty. Further announcements will be made in due course as the position becomes clearer."

On 10 January 2022, the Company announced the resumption of drilling and production activities and issued a further operational announcement on 25 January 2022.

These announcements followed two trading updates issued on 22 and 23 December 2021 which detailed improved operational performance of the group.

8.6        No agreement, arrangement or understanding exists whereby any Ordinary Shares in Caspian Sunrise PLC acquired by any member of the Oraziman Family Concert Party or the Wider Concert Party will be transferred to any other person.

9.         FINANCIAL INFORMATION ON CASPIAN SUNRISE PLC

Below is a table setting out the location of certain financial information contained within the 2019 and 2020 Annual Report and Accounts:

The Company's Annual Report and Accounts for the year ended 31 December 2019 can be found at the following website: https://www.caspiansunrise.com/wp-content/uploads/2020/06/CS-accounts-2019-Final-25-6-2020.pdf

The Company's Annual Report and Accounts for the year ended 31 December 2020 can be found at the following website: https://wp-caspiansunrise-2020.s3.eu-west-2.amazonaws.com/media/2021/06/29065925/Caspian-Sunrise-plc-2020-Report-Accounts-final.pdf

The Company's interim results for the 6 months ended 30 June 2021 can be found at the following website:

https://polaris.brighterir.com/public/caspian_sunrise/news/rns/story/wkldd1x

The above financial information has been incorporated into the Circular by reference in accordance with Rule 24.15 of the Takeover Code.

A Shareholder, person with information rights or person to whom this Circular has been sent may request a copy of the above information in hard copy form (hard copies will not be provided unless requested). Hard copies may be requested by writing to Caspian Sunrise PLC, 5 New Street Square, London, EC4A 3TW, phone number: 020 7300 7000.

10.        MATERIAL CONTRACTS

The following contracts, not being contracts entered into in the ordinary course, have been entered into by the Company or other members of the Group in the two years prior to the date of this Circular, or are subsisting agreements which are included within, or which relate to, the assets and liabilities of the Company (notwithstanding whether such agreements are within the ordinary course or were entered into outside of the two years immediately preceding the publication of this Circular) and are, or may be, material:

Debt Conversion Agreements

The agreement in respect of the Debt Conversion dated 5 August 2021 between the Company and Akku Investments LLP on behalf of the Oraziman Family Concert Party, pursuant to which the Company has agreed to repay the Oraziman Family Loan, such repayment to be satisfied by the issue to Aibek Oraziman and Aidana Urazimanova of the Conversion Shares at the Issue Price. 

The Relationship Agreement

On 20 January 2020, the Company and Kuat Oraziman, Aibek Oraziman, Aidana Urazimanova and subsequently on 10 February 2022, Altynbek Bolatzhan & Boltazhan Kerimbayev entered into an agreement to ensure that the Group is able to carry on its business independently of the Oraziman Family Concert Party and that transactions entered into between the Group and members of the Oraziman Family Concert Party will be on arm's length terms and a normal commercial basis.

Placing Agreement

On 5 August 2020, The Company entered into a Placing Agreement with WH Ireland in connection with a placing of 36,363,629 new Ordinary Shares at a price of 2.75p per share to raise before expenses £1 million for the Company for which WH Ireland was compensated £50,000. The Placing Agreement included standard warranties provided by the Company in favour of WH Ireland.

The 3A Best Farm-out Agreement

On 19 May 2021, Eragon Petroleum FZE, a 100% subsidiary of Caspian Sunrise plc, entered into a framework agreement with Espelisai Operating LLP under which Eragon Petroleum FZE agreed to sell to Espelisai Operating LLP15% of the shares held by Eragon Petroleum FZE in 3A Best Group JSC in exchange for an investment by Espelisai Operating LLP which invested US$2.5 million into 3A Best Group JSC.

The agreement also provided an option to Espelisai Operating LLP to acquire the remaining 85% of the shares in 3A Best Group JSC, subject if required under the AIM Rules to the prior approval of Caspian Sunrise shareholders.

The agreement was conditional on the renewal of the 3A Best subsoil licence by the appropriate Kazakh authorities.

Documents available for inspection

Copies of this Circular and the following documents will be available for inspection on the Company's website, https://www.caspiansunrise.com/ up to and including 9 March 2022 and at the General Meeting to be held on that day:

·              the Memorandum and Articles of Association of the Company;

·              the audited consolidated accounts of the Company for the financial years ended 31 December 2020 and 2019;

·              the interim results for the six-month period to 30 June 2021;

·              this Circular;

·              Conversion agreement referred to above; and

·              Merger Circular

NOTICE OF GENERAL MEETING

NOTICE IS HEREBY GIVEN that a general meeting of the Company will be held at the offices of Taylor Wessing LLP, 5 New Street Square, London EC4A 3TW at 11:00 a.m. on 9 March 2022.

In this notice, words and phrases that are defined in the circular to shareholders dated 15 February 2022 have the same meanings unless the context requires otherwise.

The general meeting will be held for the purpose of considering and, if thought fit, passing the following resolution of which will be proposed as an ordinary resolution (to be voted on a poll by Independent Shareholders only in accordance with the requirements of the Panel on Takeovers and Mergers (the "Panel").

Ordinary resolution

1.         THAT the waiver granted by the Panel of the obligation that would otherwise arise on the members of the Oraziman Family Concert Party to make a general offer to the Shareholders of the Company pursuant to rule 9 of the Takeover Code as a result of the issue to them of the Conversion Shares, as described in the circular of which this notice forms part, is hereby approved.

By Order of the Board

Clive Carver

Chairman

15 February 2022

Registered Office: Caspian Sunrise PLC, 5 New Street Square, London EC4A 3TW