IGas Proposed Placing of up to 24.3m Shares

 

 

15 January 2013

 

IGas Energy plc ("IGas" or the "Company")

 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO, THE UNITED STATES OF AMERICA (INCLUDING ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES AND THE DISTRICT OF COLUMBIA), AUSTRALIA, CANADA, SOUTH AFRICA OR JAPAN

 

 

 

IGas announces a proposed placing of up to 24.3 million new ordinary shares at 95.0p per share

 

IGas (the "Company") announces today its intention to place up to 24.3 million new ordinary shares (the "Placing Shares") in the Company, at a price of 95.0p per Placing Share (the "Placing Price"}, representing approximately 15 per cent. of the Company's existing issued share capital (the "Placing"), with both new and existing institutional investors.

 

The Placing is being conducted through an accelerated book-building process to be carried out by Jefferies International Limited ("Jefferies") and Canaccord Genuity Limited ("Canaccord"), in accordance with the terms and conditions set out in the Appendix to this announcement. Jefferies and Canaccord are acting as joint bookrunners (the "Bookrunners") in connection with the Placing.

 

The book will open with immediate effect. The timing of the closing of the book, pricing and allocations is at the discretion of the Bookrunners.  The number of Placing Shares are subject to agreement between IGas and the Bookrunners at the close of the book-building process. Details of the number of Placing Shares will be announced as soon as practicable after the close of the book-building process.

 

The Placing Shares will, when issued, be credited as fully paid and will rank pari passu in all respects with the existing ordinary shares of 10 pence each in the capital of the Company (the "Ordinary Shares"), including the right to receive all dividends and other distributions declared, made or paid on or in respect of such shares after the date of issue of the Placing Shares.  The Placing will be made on a non-pre-emptive basis.

 

The Company has applied for admission of the Placing Shares to trading on AIM, a market operated by the London Stock Exchange plc (the "Admission"). It is expected that Admission will take place and that trading in the Placing Shares will commence on 18 January 2013.

 

The Placing is conditional upon, amongst other things, Admission becoming effective and the Placing Agreement between the Company and the Bookrunners becoming unconditional and not being terminated, in accordance with its terms.

 

The Appendix to this announcement (which forms part of this announcement) sets out the terms and conditions of the Placing.

 

Background to and Reasons for the Placing

 

Facilitates Investment in IGas' Significant Shale Resource

IGas is the leading listed E&P company with exposure to shale in the UK and is well placed to exploit the potential of this significant resource base in the future. Following recent developments in the UK with the lifting of restrictions on exploration for shale gas announced by the UK Government on 13^th December 2012 and the establishment of the Office for Unconventional Gas and Oil, there is currently a supportive political and geological backdrop for shale gas in this country.

The Board of IGas believes that it is now appropriate to ensure that the Company is able to further demonstrate the significant potential of its unconventional resource base. The proceeds of the Placing along with cash flow from the Company's conventional asset portfolio, including PR Singleton, and the Company's existing cash will enable IGas to conduct a work programme to achieve this objective. In addition to the main Bowland basin, IGas has identified prospective shale horizons across all of its UK acreage in both the East Midlands (Bowland extension) and the Weald Basin (Kimmeridge/Lias).

Completion of P.R. Singleton Acquisition

On 28 September 2012, IGas announced the signing of a heads of terms agreement for the acquisition of P.R. Singleton Limited ("PR Singleton") from Providence Resources plc ("Providence") (the "Acquisition") for US$66m (c.£41m).

On completion, IGas will own 100% of PL240, including the Singleton field which is close to existing IGas assets in the South of England, and 50% of PEDL 233 including the Baxter's Copse and Burton Down fields. Current production from the Singleton field is c. 500bopd.

The closing of the Acquisition is conditional, inter alia, on DECC approval, completion of the Placing and drawdown on the increased credit facility. The Placing is not conditional upon completion of the Acquisition. The Board is confident that should the Acquisition not complete, the proceeds of the Placing would be able to be deployed in other activities of the business, including the further appraisal of IGas' unconventional resource base. However, this is neither the Board's intention nor expectation.

IGas Funding Arrangements

In order to fund the Acquisition, IGas intends to increase the size of its Senior Secured Credit Facility (the "Credit Facility") which it currently holds with Macquarie Bank Limited ("Macquarie"). The size of the Credit Facility is expected to be increased from $135m to $225m with the addition of a third tranche ("Facility C") of $90m, which is substantially on the same terms as Tranche B. Of this $90m, $30m is expected to be committed directly to the closing of the Acquisition with the remaining $36m to be funded from a combination of the Proceeds from the Placing and existing cash resources.

On 30 September 2012, at the time of the Company's interim results, IGas had cash balances of $14m. IGas currently has net debt of c.US$98m, which is anticipated to increase to c.US$130m following the completion of the Acquisition.

The Board has concluded that it is in the interests of shareholders to seek to raise the required finance by means of the Placing.  Further details of the intended use of the proceeds of the placing are set out below under "Use of Proceeds".

Use of Proceeds

As stated above under "Background to and Reasons for the Placing", the Group's existing cash balances and the anticipated proceeds of the Placing are expected to be used for:

1. Investment in IGas' Significant Shale Resource

In the coming months, IGas intends to further appraise its significant unconventional resource and the proceeds of the Placing will be put towards a work programme to augment value ahead of any farm-out. A two well shale appraisal programme, including comprehensive data collection (core/logs etc) and a subsequent flow test of a well, is expected to cost up to £15m. 

2. Completion of P.R. Singleton Acquisition

As detailed above, the consideration of the Acquisition will be satisfied through a mix of new debt and equity with part of the proceeds of the Placing expected to be used to acquire PR Singleton. Post completion, PR Singleton will provide IGas with a material uplift in reserves, production and cash flow. This increased cash flow will, inter alia, be used to further appraise the Company's significant unconventional resource base.

Any proceeds raised pursuant to the Placing and not applied in the manner outlined above will be used for further working capital purposes.

Andrew Austin, CEO of IGas Energy plc, commented:   

"The developing supportive backdrop to the shale gas industry in the UK, both politically and geologically, leaves IGas well placed to exploit its significant potential resources. This fundraising allows us to further appraise our shale assets and augment value ahead of a potential farm out. The acquisition of P.R. Singleton plays an important part in this process by giving IGas a material increase in reserves and production with the associated cash flow to be used on our future shale activities.

We are very excited about the future of the shale gas industry in this country and look forward to developing this potentially strategically important resource in the coming months and years."

 

ENQUIRIES

For further information please contact:

 

IGas Energy plc
Andrew  Austin, Chief Executive Officer  Stephen Bowler, Chief Financial Officer	Tel: +44 (0) 207 993 9901
Jefferies International Limited
Sara Hale	Tel: +44 (0) 207 029 8000
Jamie Buckland
Lee Morton
CanaccordGenuity
Giles Fitzpatrick	Tel: +44 (0) 207 523 8000
Tim Redfern Henry Fitzgerald O'Connor
Kreab Gavin Anderson
Ken Cronin	Tel: +44 (0)20 7074 1800
Anthony Hughes

 

 

 

 

 

 

DISCLAIMER

 

This announcement has been issued by and is the sole responsibility of IGas plc (the "Company"). This announcement is for information only and does not constitute an offer or invitation to underwrite, subscribe for or otherwise acquire or dispose of any securities or investment advice in any jurisdiction in which such an offer or solicitation is unlawful, including without limitation, the United States, the United Kingdom, Australia, Canada, South Africa or Japan.  Persons needing advice should consult an independent financial adviser.

 

No prospectus or admission document will be made available in connection with the matters contained in this announcement.

 

Jefferies International Limited ("Jefferies") and Canaccord Genuity Limited ("Canaccord"), each of which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting for the Company and for no-one else in relation to the Placing, and will not be responsible to any other person for providing the protections afforded to its respective clients nor for providing advice in connection with the matters contained in this announcement. No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by Jefferies or Canaccord or by any of their respective affiliates or agents as to or in relation to, the accuracy or completeness of this announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed.

 

The distribution of this announcement and the placing of the Placing Shares as set out in this announcement in certain jurisdictions may be restricted by law. No action has been taken by the Company or Jefferies or Canaccord that would permit an offering of the Placing Shares or possession or distribution of this announcement or any other offering or publicity material relating to the Placing Shares in any jurisdiction where action for that purpose is required. Persons into whose possession this announcement comes are required by the Company and Jefferies and Canaccord to inform themselves about, and to observe, such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

 

This announcement is directed only at persons (i) having professional experience in matters relating to investments who fall within the definition of "investment professionals" in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (ii) who are high net worth entities falling within Article 49(2)(a) to (d) of the Order, and other persons to whom it may otherwise lawfully be communicated (all such persons together being referred to as "relevant persons"). This announcement must not be acted or relied on in the United Kingdom by persons who are not relevant persons.

 

In member states of the European Economic Area ("EEA"), this announcement is only addressed to and directed at persons who are 'qualified investors' within the meaning of Article 2(1)(e) of the Prospectus Directive (Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State) and includes any relevant implementing measure in each Relevant Member State) (the "Prospectus Directive") ("Qualified Investors"). 

 

This announcement is not an offer of securities for sale in the United States. The Placing Shares may not be offered, sold or transferred, directly or indirectly, within the United States absent registration under the US Securities Act of 1933 (the "Securities Act") or an exemption therefrom. The Company has not registered and does not intend to register any of the Placing Shares under the US Securities Act. No money, securities or other consideration is being solicited from any person inside the United States and, if sent in response to the information herein, will not be accepted. The Placing Shares will not be sold to the public in the United States.

 

Any indication in this announcement of the price at which Ordinary Shares have been bought or sold in the past cannot be relied upon as a guide to future performance. No statement in this announcement is intended to be a profit or production forecast and no statement in this announcement should be interpreted to mean that earnings per share of the Company for the current or future financial years would necessarily match or exceed the historical published earnings per share of the Company.

 

The price of Ordinary Shares and the income from them may go down as well as up and investors may not get back the full amount invested on disposal of the Placing Shares.

 

Neither the content of the Company's website (or any other website) nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

 

Forward-looking Statements 

 

Certain statements included in this announcement contain forward-looking information concerning IGas's strategy, operations, financial performance or condition, outlook, growth opportunities or circumstances in the sectors or markets in which IGas operates. By their nature, forward-looking statements involve uncertainty because they depend on future circumstances, and relate to events, not all of which are within the Company's control or can be predicted by the Company. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Actual results could differ materially from those set out in the forward-looking statements. Nothing in this announcement should be construed as a profit forecast and no part of these results constitutes, or shall be taken to constitute, an invitation or inducement to invest in IGas, and must not be relied upon in any way in connection with any investment decision. Any forward-looking statements made herein by or on behalf of IGas speak only as of the date they are made. Except as required by the FSA, AIM or applicable law, IGas expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this announcement to reflect any changes in IGas expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.

  

Exchange Rates

 

US$ amounts in this announcement have been converted into £ Sterling at an exchange rate of US$1.61 = £1, the rate prevailing at close of business in London on 14 January 2013, the latest practicable time and date prior to this announcement.

 

 

APPENDIX

 

TERMS AND CONDITIONS

 

IMPORTANT INFORMATION FOR PLACEES ONLY REGARDING THE PLACING

 

Details of the Placing

The Managers have entered into an agreement with IGas (the "Placing Agreement") under which, subject to the conditions set out in that agreement, the Managers have agreed, as agents and on behalf of the Company, to use reasonable endeavours to procure subscribers for the Placing Shares at a single price of 95p per Placing Share (the "Placing Price"), where the exact number of the Placing Shares to be issued to Placees shall be determined following completion of the bookbuilding process in respect of the Placing (the "Bookbuild"), described in this announcement and set out in the Placing Agreement.

 

The Placing Shares will, when issued, be credited as fully paid and will rank pari passu in all respects with the existing Ordinary Shares of IGas including the right to receive all dividends and other distributions declared in respect of such Ordinary Shares after the date of issue of the Placing Shares.

 

As part of the Placing, IGas has agreed that it will not issue or sell any Ordinary Shares for a period of 180 days after Admission, without the prior consent of the Managers. This agreement does not however prevent IGas from granting or satisfying exercises of options granted pursuant to existing employee share schemes of IGas or in accordance with compensation arrangements for non-executive directors.

 

Application for admission to trading

 

Application will be made to the London Stock Exchange for admission of the Placing Shares to trading on AIM. It is expected that Admission will become effective on or around 18 January 2013 and that dealings in the Placing Shares will commence at that time.

 

Bookbuild

 

The Managers will today commence the Bookbuild to determine demand for participation in the Placing by Placees. This Appendix gives details of the terms and conditions of, and the mechanics of participation in, the Placing. No commissions will be paid to Placees or by Placees in respect of any Placing Shares.

 

The Managers shall be entitled to effect the Placing by such alternative method to the Bookbuild as they may, in their absolute discretion following consultation with IGas, determine.

 

Participation in, and principal terms of, the Placing

 

1.     Each of Jefferies and Canaccord, severally and not jointly nor jointly and severally, is acting as bookrunner and agent of IGas.

 

2.     Participation in the Placing will only be available to persons who may lawfully be, and are, invited to participate by the Managers. The Managers and their respective affiliates are each entitled to enter bids in the Bookbuild as principal.

 

3.     The Bookbuild will be done on the basis of the Placing Price of 95.0p per Placing Share payable to the Managers by all Placees whose bids are successful. The number of Placing Shares to be issued will be agreed between the Managers and IGas following completion of the Bookbuild. The number of Placing Shares will be announced on a Regulatory Information Service following the completion of the Bookbuild.

 

4.     To bid in the Bookbuild, Placees should communicate their bid by telephone to their usual sales contact at the relevant Manager. Each bid should state the number of Placing Shares which the prospective Placee wishes to subscribe for at the Placing Price.  Bids may be scaled down by the Managers on the basis referred to in paragraph 8 below.

 

5.     The Bookbuild is expected to close no later than 4.35 p.m. (London time) on 15 January 2013, but may be closed earlier or later at the discretion of the Managers. The Managers may, in agreement with IGas, accept bids that are received after the Bookbuild has closed. IGas reserves the right (upon the agreement of the Managers) to reduce or seek to increase the amount to be raised pursuant to the Placing, in its absolute discretion.

 

6.     Each prospective Placee's allocation will be agreed between the Managers and IGas and will be confirmed orally by the relevant Manager as agent of IGas following the close of the Bookbuild. That oral confirmation will constitute an irrevocable legally binding commitment upon that person (who will at that point become a Placee) in favour of the relevant Manager and IGas to subscribe for the number of Placing Shares allocated to it at the Placing Price on the terms and conditions set out in this Appendix and in accordance with IGas' memorandum and articles of association.

 

7.     Each Placee will also have an immediate, separate, irrevocable and binding obligation, owed to the Managers as agents of IGas, to pay the relevant Manager (or as it may direct) in cleared funds, an amount equal to the product of the Placing Price and the number of Placing Shares such Placee has agreed to subscribe and IGas has agreed to allot and issue to that Placee.

 

8.     The Managers may choose to accept bids, either in whole or in part, on the basis of allocations determined in agreement with IGas and may scale down any bids for this purpose on such basis as they may determine. The Managers may also, notwithstanding paragraphs 4 and 5 above, subject to the prior consent of IGas (i) allocate Placing Shares after the time of any initial allocation to any person submitting a bid after that time and (ii) allocate Placing Shares after the Bookbuild has closed to any person submitting a bid after that time.

 

9.     A bid in the Bookbuild will be made on the terms and subject to the conditions in this announcement and will be legally binding on the Placee on behalf of which it is made and except with the consent of the Managers will not be capable of variation or revocation after the time at which it is submitted.

 

10.  Irrespective of the time at which a Placee's allocation pursuant to the Placing is confirmed, settlement for all Placing Shares to be acquired pursuant to the Placing will be required to be made at the same time, on the basis explained below under "Registration and Settlement".

 

11.  All obligations under the Bookbuild and Placing will be subject to fulfilment of the conditions referred to below under "Conditions of the Placing" and to the Placing not being terminated on the basis referred to below under "Termination of the Placing Agreement".

 

12.  By participating in the Bookbuild, each Placee will agree that its rights and obligations in respect of the Placing will terminate only in the circumstances described below and will not be capable of rescission or termination by the Placee.

 

13.  To the fullest extent permissible by law, neither the Managers nor any of their respective affiliates shall have any liability to Placees (or to any other person whether acting on behalf of a Placee or otherwise). In particular, neither the Managers nor any of their respective affiliates shall have any liability (including to the fullest extent permissible by law, any fiduciary duties) in respect of their conduct of the Bookbuild or of such alternative method of effecting the Placing as the Managers may determine.

 

Conditions of the Placing

 

The obligations of the Managers under the Placing Agreement are conditional on, amongst other things:

 

(a)   agreement being reached between IGas and the Managers on the number of Placing Shares;

 

(b)   none of the representations and warranties contained in the Placing Agreement not being, or ceasing to be, true and accurate on the date of the Placing Agreement or at any time down to and including Admission (by reference to the facts and circumstances then existing);

 

(c)   IGas complying with its obligations under the Placing Agreement to the extent the same fall to be performed or satisfied prior to Admission; 

 

(d)   Admission taking place by 8.00 a.m. (London time) on 18 January 2013 (or such later date as IGas and the Managers may otherwise agree); and

 

(e)   in the opinion of the Managers, there not having been a material adverse change in, or any development likely to involve a prospective material adverse change in the condition (financial, operational, legal or otherwise), or in the earnings, business affairs, trading position or business prospects of IGas and its subsidiaries, whether or not arising in the ordinary course of business since the date of the Placing Agreement.

 

If any of the conditions contained in the Placing Agreement in relation to the Placing Shares are not fulfilled or waived by the Managers, by the respective time or date where specified (or such later time and/or date as IGas and the Managers may agree), the Placing will not proceed and the Placee's rights and obligations hereunder in relation to the Placing Shares shall cease and terminate at such time and each Placee agrees that no claim can be made by the Placee in respect thereof.

 

The Managers may, at their discretion and upon such terms as they think fit, waive compliance by IGas with the whole or any part of any of IGas' obligations in relation to the conditions in the Placing Agreement save that the condition in the Placing Agreement relating to Admission taking place may not be waived. Any such extension or waiver will not affect Placees' commitments as set out in this announcement.

 

None of the Managers, IGas or any other person shall have any liability to any Placee (or to any other person whether acting on behalf of a Placee or otherwise) in respect of any decision they may make as to whether or not to waive or to extend the time and / or the date for the satisfaction of any condition to the Placing nor for any decision they may make as to the satisfaction of any condition or in respect of the Placing generally, and by participating in the Placing each Placee agrees that any such decision is within the absolute discretion of the Managers.

 

Termination of the Placing Agreement

 

Each Manager is entitled, at any time before Admission, to terminate the Placing Agreement in relation to its obligations in respect of the Placing Shares by giving notice to IGas if, amongst other things:

 

(a)          (i) any of IGas' warranties, representations or undertakings contained in the Placing Agreement are not or cease to be true and accurate or (ii) there is a failure by IGas to comply with its obligations under the Placing Agreement; or

 

(b)          it shall come to the notice of either of the Managers that any statement contained in this announcement, or any other document or announcement issued or published by or on behalf of IGas in connection with the Placing (together the "Placing Documents"), is or has become untrue, incorrect or misleading, or any matter has arisen, which would, if the Placing were made at that time, constitute a material omission from the Placing Documents, or any of them, in each case in a manner which, in the good faith opinion of either of the Managers, is material in the context of the Placing; or

 

(c)           in the good faith opinion of either of the Managers, there has been a material adverse change in, or any development reasonably likely to involve a prospective material adverse change in the condition (financial, operational, legal or otherwise), or in the earnings, business affairs, trading position or business prospects of IGas and its subsidiaries, whether or not arising in the ordinary course of business since the date of the Placing Agreement; or

 

(d)          there has occurred (i) any material adverse change in the financial markets in the United States, the United Kingdom, a member state of the European Union or in the international financial markets, (ii) any outbreak or escalation of hostilities or other calamity or crisis, (iii) any change or development involving a prospective change in national or international political, financial or economic conditions, or currency exchange rates, or (iv) trading in Ordinary Shares on AIM is cancelled, suspended or limited or there are certain other disruptions, limitations or suspensions in respect of the operations of certain stock exchanges or a banking moratorium is declared by certain authorities, in each case the effect of which is such as to make it, in the good faith opinion of either of the Managers, impracticable or inadvisable to market the Placing Shares or to proceed with the Placing in the manner contemplated in the Placing Documents or which may adversely affect the success of the Placing or dealings in the Placing Shares following Admission.

 

Upon such termination, the parties to the Placing Agreement shall be released and discharged (except for any liability arising before or in relation to such termination) from their respective obligations under or pursuant to the Placing Agreement subject to certain exceptions.

 

By participating in the Placing, Placees agree that the exercise by either of the Managers of any right of termination or other discretion under the Placing Agreement shall be within the absolute discretion of such Manager and that such Manager need not make any reference to Placees and that it shall have no liability to Placees whatsoever in connection with any such exercise or failure so to exercise.

 

No prospectus

 

No offering document, prospectus or admission document has been or will be submitted to be approved by the FSA or submitted to the London Stock Exchange in relation to the Placing and Placees' commitments will be made solely on the basis of the information contained in this announcement (including this Appendix) released by IGas today, and subject to the further terms set forth in the contract note to be provided to individual prospective Placees.

 

Each Placee, by accepting a participation in the Placing, agrees that the content of this announcement (including this Appendix) is exclusively the responsibility of IGas and confirms that it has neither received nor relied on any other information, representation, warranty, or statement made by or on behalf of IGas or the Managers or any other person and none of the Managers or IGas nor any other person will be liable for any Placee's decision to participate in the Placing based on any other information, representation, warranty or statement which the Placees may have obtained or received. Each Placee acknowledges and agrees that it has relied on its own investigation of the business, financial or other position of IGas in accepting a participation in the Placing. Nothing in this paragraph shall exclude the liability of any person for fraudulent misrepresentation.

 

Registration and settlement

 

Settlement of transactions in the Placing Shares following Admission will take place within the system administered by Euroclear UK & Ireland Limited ("CREST"), subject to certain exceptions. IGas reserves the right to require settlement for and delivery of the Placing Shares (or a portion thereof) to Placees in certificated form if, in the Managers' opinion, delivery or settlement is not possible or practicable within the CREST system or would not be consistent with the regulatory requirements in the Placee's jurisdiction.

 

Following the close of the Bookbuild for the Placing, each Placee allocated Placing Shares in the Placing will be sent a contract note stating the number of Placing Shares to be allocated to it at the Placing Price and settlement instructions.

 

Each Placee agrees that it will do all things necessary to ensure that delivery and payment is completed in accordance with the standing CREST or certificated settlement instructions that it has in place with the relevant Manager.

 

IGas will deliver the Placing Shares to a CREST account operated by the relevant Manager as agent for IGas and the relevant Manager will enter its delivery (DEL) instruction into the CREST system.  The input to CREST by a Placee of a matching or acceptance instruction will then allow delivery of the relevant Placing Shares to that Placee against payment.

 

It is expected that settlement will take place on 18 January 2013, on a delivery versus payment basis.

 

Interest is chargeable daily on payments not received from Placees on the due date in accordance with the arrangements set out above at the rate of two percentage points above LIBOR as determined by the Managers.

 

Each Placee is deemed to agree that, if it does not comply with these obligations, the relevant Manager may sell any or all of the Placing Shares allocated to that Placee on such Placee's behalf and retain from the proceeds, for the Managers account and benefit, an amount equal to the aggregate amount owed by the Placee plus any interest due. The relevant Placee will, however, remain liable for any shortfall below the aggregate amount owed by it and may be required to bear any stamp duty or stamp duty reserve tax (together with any interest or penalties) which may arise upon the sale of such Placing Shares on such Placee's behalf.

 

If Placing Shares are to be delivered to a custodian or settlement agent, Placees should ensure that the trade confirmation is copied and delivered immediately to the relevant person within that organisation. Insofar as Placing Shares are registered in a Placee's name or that of its nominee or in the name of any person for whom a Placee is contracting as agent or that of a nominee for such person, such Placing Shares should, subject as provided below, be so registered free from any liability to UK stamp duty or stamp duty reserve tax. Placees will not be entitled to receive any fee or commission in connection with the Placing.

 

Representations and warranties

 

By participating in the Placing each Placee (and any person acting on such Placee's behalf) irrevocably acknowledges, confirms, undertakes, represents, warrants and agrees (as the case may be) with each of the Managers (in its capacity as underwriter of settlement of the Placing Shares and bookrunner and placing agent of the Company, in each case as a fundamental term of their application for Placing Shares), the following:

 

1.            that it has read and understood this announcement, including the Appendix, in its entirety;

 

2.            that (i) no offering document, listing particulars, prospectus or admission document has been or will be prepared in connection with the Placing and (ii) it has not received a prospectus, admission document or other offering document in connection with the Bookbuild, the Placing or the Placing Shares;

 

3.            that the Ordinary Shares in the capital of IGas are admitted to trading on AIM, and IGas is therefore required to publish certain business and financial information in accordance with the rules and practices of AIM (collectively, the "Exchange Information"), which includes a description of the nature of IGas' business and IGas' most recent balance sheet and profit and loss account and that it is able to obtain or access (i) such Exchange Information and (ii) such information or comparable information concerning any other publicly traded company, in each case without undue difficulty;

 

4.            that none of the Managers nor IGas nor any of their respective affiliates nor any person acting on behalf of any of them has provided, and will not provide, it with any material regarding the Placing Shares or IGas or any other person other than this announcement; nor has it requested any of the Managers, IGas, any of their respective affiliates or any person acting on behalf of any of them to provide it with any such information;

5.            that the Placing Shares have not been and will not be registered under the securities legislation of the United States, Australia, Canada, South Africa or Japan and, subject to certain exceptions, may not be offered, sold, transferred, delivered or distributed, directly or indirectly, in or into those jurisdictions;

 

6.            that (i) it is not within the United States; (ii) it is not within Australia, Canada, South Africa, Japan or any other jurisdiction in which it is unlawful to make or accept an offer to acquire the Placing Shares; (iii) it is not acquiring the Placing Shares for the account of any person who is located in the United States, unless the instruction to acquire was received from a person outside the United States and person giving such instruction has confirmed that it has the authority to give such instruction, and that either (a) it has investment discretion over such account or (b) it is an investment manager or investment company and, in the case of each of (a) and (b), that it is acquiring the Placing Shares in an "offshore transaction" (within the meaning of Regulation S under the Securities Act); and (iv) it is not acquiring the Placing Shares with a view to the offer, sale, resale, transfer, delivery or distribution, directly or indirectly, of any such Placing Shares into the United States or any other jurisdiction referred to in (ii) above;

 

7.            that the content of this announcement is exclusively the responsibility of IGas and that neither the Managers nor any person acting on their respective behalf has or shall have any liability for any information, representation or statement contained in this announcement or any information previously published by or on behalf of IGas and will not be liable for any Placee's decision to participate in the Placing based on any information, representation or statement contained in this announcement or otherwise. Each Placee further represents, warrants and agrees that the only information on which it is entitled to rely and on which such Placee has relied in committing itself to subscribe for the Placing Shares is contained in this announcement and any information previously published by IGas by notification to a Regulatory Information Service, such information being all that it deems necessary to make an investment decision in respect of the Placing Shares and that it has neither received nor relied on any other information given or representations, warranties or statements made by any of the Managers or IGas and neither of the Managers nor IGas will be liable for any Placee's decision to accept an invitation to participate in the Placing based on any other information, representation, warranty or statement. Each Placee further acknowledges and agrees that it has relied on its own investigation of the business, financial or other position of IGas in deciding to participate in the Placing;

 

8.            that neither the Managers nor any person acting on their respective behalf nor any of their respective affiliates has or shall have any liability for any publicly available or filed information, or any representation relating to IGas, provided that nothing in this paragraph excludes the liability of any person for fraudulent misrepresentation made by that person;

 

9.            that neither it, nor the person specified by it for registration as a holder of Placing Shares is, or is acting as nominee or agent for, and that the Placing Shares will not be allotted to, a person who is or may be liable to stamp duty or stamp duty reserve tax under any of sections 67, 70, 93 and 96 of the Finance Act 1986 (depositary receipts and clearance services);

 

10.          that it has complied with its obligations under the Criminal Justice Act 1993, section 118 of the Financial Services and Markets Act 2000 ("FSMA") and in connection with money laundering and terrorist financing under the Proceeds of Crime Act 2002 (as amended), the Terrorism Act 2000, the Terrorism Act 2006, the Money Laundering Regulations 2007 (the "Regulations") and the Money Laundering Sourcebook of the FSA and, if making payment on behalf of a third party, that satisfactory evidence has been obtained and recorded by it to verify the identity of the third party as required by the Regulations;

 

11.          that it is acting as principal only in respect of the Placing or, if it is acting for any other person (i) it is duly authorised to do so, and (ii) it is and will remain liable to IGas and/or the Managers for the performance of all its obligations as a Placee in respect of the Placing (regardless of the fact that it is acting for another person);

 

12.          if a financial intermediary, as that term is used in Article 3(2) of EU Directive 2003/71/EC (the "Prospectus Directive") (including any relevant implementing measure in any member state), that the Placing Shares subscribed by it in the Placing will not be acquired on a non-discretionary basis on behalf of, nor will they be acquired with a view to their offer or resale to, persons in a member state of the European Economic Area other than to qualified investors, or in circumstances in which the prior consent of the Managers has been given to the proposed offer or resale;

 

13.          that it has not offered or sold and, prior to the expiry of a period of six months from Admission, will not offer or sell any Placing Shares to persons in the United Kingdom, except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted and which will not result in an offer to the public in the United Kingdom within the meaning of section 85(1) of FSMA;

 

14.          that it has not offered or sold and will not offer or sell any Placing Shares to persons in the European Economic Area prior to Admission except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted in and which will not result in an offer to the public in any member state of the European Economic Area within the meaning of the Prospectus Directive (including any relevant implementing measure in any member state);

 

15.          that it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of FSMA) relating to the Placing Shares in circumstances in which section 21(1) of FSMA does not require approval of the communication by an authorised person;

 

16.          that it has complied and will comply with all applicable provisions of FSMA with respect to anything done by it in relation to the Placing Shares in, from or otherwise involving, the United Kingdom;

 

17.          (A)     that it is a person falling within Article 19(5) and / or Article 49(2)(a) to (d) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 or is a person to whom this announcement may otherwise be lawfully communicated; and

(B)     that any offer of Placing Shares may only be directed at persons to the extent in member states of the European Economic Area who are "qualified investors" within the meaning of Article 2(1)(e) of the Prospectus Directive and represents and agrees that it is such a qualified investor;

 

18.          that it is entitled to purchase the Placing Shares under the laws of all relevant jurisdictions which apply to it, and that its subscription/purchase of the Placing Shares will be in compliance with applicable laws and regulations in the jurisdiction of its residence, the residence of the Company, or otherwise;

 

19.          that it (and any person acting on its behalf) will make payment for the Placing Shares allocated to it in accordance with this announcement on the due time and date set out herein, failing which the relevant Placing Shares may be placed with other subscribers or sold as the Managers may in their discretion determine and without liability to such Placee;

 

20.          that its allocation (if any) of Placing Shares will represent a maximum number of Placing Shares which it will be entitled, and required, to subscribe for, and that IGas may call upon it to subscribe for a lower number of Placing Shares (if any), but in no event in aggregate more than the aforementioned maximum;

 

21.          that neither the Managers, nor any of their respective affiliates, nor any person acting on any of their behalf, is making any recommendations to it, advising it regarding the suitability of any transactions it may enter into in connection with the Placing and that participation in the Placing is on the basis that it is not and will not be a client of any of the Managers and that none of the Managers have duties or responsibilities to it for providing the protections afforded to their clients or customers or for providing advice in relation to the Placing nor in respect of any representations, warranties, undertakings or indemnities contained in the Placing Agreement nor for the exercise or performance of any of its rights and obligations thereunder including any rights to waive or vary any conditions or exercise any termination right;

 

22.          that the person whom it specifies for registration as holder of the Placing Shares will be (i) itself or (ii) its nominee, as the case may be.  Neither the Managers nor IGas will be responsible for any liability to stamp duty or stamp duty reserve tax resulting from a failure to observe this requirement. Each Placee and any person acting on behalf of such Placee agrees to participate in the Placing and it agrees to indemnify IGas and each of the Managers in respect of the same on the basis that the Placing Shares will be allotted to the CREST stock account of the relevant Manager who will hold them as nominee on behalf of such Placee until settlement in accordance with its standing settlement instructions;

 

23.          that these terms and conditions and any agreements entered into by it pursuant to these terms and conditions and any non-contractual obligations arising out of or in connection with such agreements shall be governed by and construed in accordance with the laws of England and Wales and it submits (on behalf of itself and on behalf of any person on whose behalf it is acting) to the exclusive jurisdiction of the English courts as regards any claim, dispute or matter arising out of any such contract, except that enforcement proceedings in respect of the obligation to make payment for the Placing Shares (together with any interest chargeable thereon) may be taken by IGas or the Managers in any jurisdiction in which the relevant Placee is incorporated or in which any of its securities have a quotation on a recognised stock exchange;

 

24.          that IGas, the Managers and their respective affiliates will rely upon the truth and accuracy of the representations, warranties and acknowledgements set forth herein and which are irrevocable and it irrevocably authorises IGas and the Managers to produce this announcement, pursuant to, in connection with, or as may be required by any applicable law or regulation, administrative or legal proceeding or official inquiry with respect to the matters set forth herein;

 

25.          that it will indemnify and hold IGas, each of the Managers and their respective affiliates harmless from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of the representations, warranties, acknowledgements, agreements and undertakings in this Appendix and further agrees that the provisions of this Appendix shall survive after completion of the Placing;

 

26.          that it will acquire any Placing Shares subscribed by it for its account or for one or more accounts as to each of which it exercises sole investment discretion and it has full power to make the acknowledgements, representations and agreements herein on behalf of each such account;

 

27.          that its commitment to subscribe for Placing Shares on the terms set out herein and in the contract note will continue notwithstanding any amendment that may in future be made to the terms of the Placing and that Placees will have no right to be consulted or require that their consent be obtained with respect to IGas' conduct of the Placing.  The foregoing representations, warranties and confirmations are given for the benefit of IGas as well as the Managers. The agreement to settle a Placee's subscription (and/or the subscription of a person for whom such Placee is contracting as agent) free of stamp duty and stamp duty reserve tax depends on the settlement relating only to the subscription by it and/or such person direct from IGas for the Placing Shares in question. Such agreement assumes, and is based on a warranty from each Placee, that neither it, nor the person specified by it for registration as holder, of Placing Shares is, or is acting as nominee or agent for, and that the Placing Shares will not be allotted to, a person who is or may be liable to stamp duty or stamp duty reserve tax under any of sections 67, 70, 93 and 96 of the Finance Act 1986 (depositary receipts and clearance services). If there are any such arrangements, or the settlement relates to any other dealing in the Placing Shares, stamp duty or stamp duty reserve tax may be payable. In that event the Placee agrees that it shall be responsible for such stamp duty or stamp duty reserve tax, and neither IGas nor the Managers shall be responsible for such stamp duty or stamp duty reserve tax. If this is the case, each Placee should seek its own advice and notify the Managers accordingly;

 

28.          that no action has been or will be taken by any of IGas, the Managers or any person acting on behalf of IGas or the Managers that would, or is intended to, permit a public offer of the Placing Shares in any country or jurisdiction where any such action for that purpose is required;

 

29.          that in making any decision to subscribe for the Placing Shares, it has knowledge and experience in financial, business and international investment matters as is required to evaluate the merits and risks of subscribing for or purchasing the Placing Shares.  It further confirms that it is experienced in investing in securities of this nature in this sector and is aware that it may be required to bear, and is able to bear, the economic risk of, and is able to sustain a complete loss in connection with the Placing. It further confirms that it relied on its own examination and due diligence of IGas and its associates taken as a whole, and the terms of the Placing, including the merits and risks involved;

 

30.          that it has (a) made its own assessment and satisfied itself concerning legal, regulatory, tax, business and financial considerations in connection herewith to the extent it deems necessary; (b) had access to review publicly available information concerning the IGas group that it considers necessary or appropriate and sufficient in making an investment decision; (c) reviewed such information as it believes is necessary or appropriate in connection with its subscription or purchase of the Placing Shares; and (d) made its investment decision based upon its own judgement, due diligence and analysis and not upon any view expressed or information provided by or on behalf of the Managers;

 

31.          that it may not rely on any investigation that any of the Managers or any person acting on its behalf may or may not have conducted with respect to IGas, its group, or the Placing and none of the Managers have made any representation to it, express or implied, with respect to the merits of the Placing, the subscription or purchase of the Placing Shares, or as to the condition, financial or otherwise, of IGas, its group, or as to any other matter relating thereto, and nothing herein shall be construed as a recommendation to it to purchase the Placing Shares. It acknowledges and agrees that no information has been prepared by any of the Managers or IGas for the purposes of this Placing;

 

32.          accordingly it acknowledges and agrees that it will not hold the Managers, any of their respective associates or any person acting on any of their behalf responsible or liable for any misstatements in or omission from any publicly available information relating to IGas' group or information made available (whether in written or oral form) in presentations or as part of roadshow discussions with investors relating to IGas' group (the "Information") and that none of  the Managers or any person acting on their respective behalf, makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of such Information or accepts any responsibility for any of such Information;

 

33.          irrevocably appoints any director or employee of the Managers as its agent for the purpose of executing and delivering to IGas and / or the registrar any documents on its behalf necessary to enable it to be registered as the holder of Ordinary Shares comprising its participation in the Placing or to complete the sale of such Ordinary Shares in the circumstances referred to in this announcement;

 

34.          that, if it is a pension fund or investment company, its subscription for Placing Shares is in full compliance with all applicable laws and regulation; and

 

35.          that in connection with the Placing, each of the Managers and any of their respective affiliates acting as an investor for its own account may take up Placing Shares in IGas and in that capacity may retain, purchase or sell for its own account such Placing Shares in IGas and any securities of IGas or related investments and may offer or sell such securities or other investments otherwise than in connection with the Placing.  The Managers do not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligation to do so.

 

By participating in the Placing, each Placee (and any person acting on the Placee's behalf) subscribing for Placing Shares acknowledges that: (i) the Placing Shares are being offered and sold only pursuant to Regulation S under the Securities Act in a transaction not involving a public offering of securities in the United States and the Placing Shares have not been and will not be registered under the Securities Act; and (ii) the offer and sale of the Placing Shares to it has been made outside of the United States in an "offshore transaction" (as such term is defined in Regulation S under the Securities Act) and it is outside of the United States during any offer or sale of Placing Shares to it.

 

In addition, Placees should note that they will be liable for any stamp duty and all other stamp, issue, securities, transfer, registration, documentary or other duties or taxes (including any interest, fines or penalties relating thereto) payable outside the United Kingdom by them or any other person on the subscription by them of any Placing Shares or the agreement by them to subscribe for any Placing Shares.

 

Each Placee and any person acting on behalf of each Placee acknowledges and agrees that the Managers or any of their respective affiliates may, at their absolute discretion, agree to become a Placee in respect of some or all of the Placing Shares.

 

When a Placee or person acting on behalf of the Placee is dealing with any of the Managers, any money held in an account with the relevant Manager on behalf of the Placee and/or any person acting on behalf of the Placee will not be treated as client money within the meaning of the rules and regulations of the FSA made under FSMA. The Placee acknowledges that the money will not be subject to the protections conferred by the client money rules; as a consequence, this money will not be segregated from the relevant Manager's money in accordance with the client money rules and will be used by the relevant Manager in the course of its own business; and the Placee will rank only as a general creditor of the relevant Manager.

 

All times and dates in this announcement may be subject to amendment. The Managers shall notify the Placees and any person acting on behalf of the Placees of any changes.

 

Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser.

 

DEFINITIONS

 

In this announcement:

 

"2010 PD Amending Directive" means Directive 2010/73/EU;

"Admission" means the admission of the Placing Shares to trading on AIM becoming effective in accordance with the AIM Rules;

"AIM" means the AIM market operated by the London Stock Exchange;

"AIM Rules" means the current rules published by the London Stock Exchange applicable to companies with a class of securities admitted to trading on AIM;

"Board" or "Directors" means the directors of the Company;

"bcf" means billion standard cubic feet of gas;

"Canaccord" means Canaccord Genuity Limited;

"CBM" means coal bed methane;

"CREST" means the relevant system, as defined in the Uncertificated Securities Regulations 2001 (SI 2001/3755) (in respect of which Euroclear UK & Ireland Limited is the operator);

"DECC" means the Department for Energy and Climate Change;

"FDP" means Field Development Plan;

"FSA" means the Financial Services Authority;

"G&A" means general and administrative expenses;

"Group" means the Company and its subsidiary undertakings from time to time and all of them and each of them as the context admits and "Group Company" means any one of them and which, for the avoidance of doubt, shall include the Target unless the context requires otherwise;

"IFRS" means International Financial Reporting Standards;

"IGas" or the "Company" means IGas Energy plc and/or its subsidiaries as appropriate;

"Jefferies" means Jefferies International Limited;

"Managers" means Jefferies International Limited and Canaccord Genuity Limited, or any one of them as the context shall require;

"London Stock Exchange" means London Stock Exchange plc;

"Ordinary Shares" means ordinary shares of 10 pence each in the capital of the Company and "Ordinary Share" means any one of them;

"PEDL" means UK Petroleum Exploration and Development Licences;

"Placees" means persons by whom or on whose behalf a commitment to acquire Placing Shares has been given and "Placee" means any one of them;

"Placing" means the placing of the Placing Shares by the Managers, on behalf of the Company, with both new and existing institutional investors;

"Placing Agreement" means the placing agreement dated the date of this announcement among the Company and the Managers in respect of the Placing;

"Placing Price" means the price of 95p per Ordinary Share at which the Placing Shares are placed with the Placees;

"Placing Shares" means the Ordinary Shares which are to be issued pursuant to the Placing;

"Prospectus Directive" means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State) and includes any relevant implementing measure in each Relevant Member State;

"Regulatory Information Service" means any of the regulatory information services included within the list maintained on the London Stock Exchange's website;

"Securities Act" means the US Securities Act of 1933, as amended;

"Shareholders" means holders of Ordinary Shares and "Shareholder" means any one of them;

"Target" means P.R. Singleton Limited;

"United Kingdom" or "UK" means the United Kingdom of Great Britain and Northern Ireland; and

"United States" or "US" means the United States of America, its territories and possessions, any state of the United States and the District of Columbia.