Rollover of 2018 Loan Notes

Prospex Energy PLC / Index: AIM / Epic: PXEN / Sector: Oil and Gas

28 June 2021

Prospex Energy PLC ('Prospex' or the 'Company')

Rollover of 2018 Loan Notes

Highlights

·    83% of holders of 2018 Loan Note agree to rollover into new unsecured 2021 Loan Note

·    Terms of 2021 Loan Note largely the same as 2018 Loan Note save for 18-month extension to repayment dates and increase in interest rate to 12% from 10%

·    Board believes high uptake of rollover reflects progress made across European gas and power portfolio

Prospex Energy PLC, the AIM quoted investment company focused on European gas and power projects, is pleased to announce that the majority of holders of the Company's 2018 unsecured loan note ('2018 Loan Note') have agreed to rollover their combined holdings, totalling £321,680.68, into a new unsecured loan note ('the 2021 Loan Note').  In line with this, the Company is issuing £321,680.68 of the 2021 Loan Note to existing holders of the 2018 Loan Note ('the Subscribers'), including several directors of the Company. The Directors believe the agreement of the Subscribers to rollover into the new loan note reflects the considerable progress made by Prospex over the last 12 months across its portfolio of onshore European gas and power projects.

Under the terms of 2018 Loan Note, holders are entitled to the outstanding capital returned in equal instalments in June 2021, December 2021, and June 2022.  The terms of the 2021 Loan Note reflect those of the 2018 Loan Note except all the repayment dates have effectively been extended by 18 months to December 2022, June 2023, and December 2023, while the annualised interest rate is now 12% versus 10%. The 2021 Loan Note will pay 6% interest every six months, with the first payment due on 31 December 2021.

Prior to the issue of the 2021 Loan Note, there was a total of £386,016.82 of 2018 Loan Note in issue.  Following the agreement of 83% of holders of 2018 Loan Note to rollover into the 2021 Loan Note (and the subsequent issue of £321,680.68 of the 2021 Loan Note), a total of £64,336.14 of 2018 Loan Note remains outstanding, the terms of which have not changed.    

Prospex non-executive Chairman, Bill Smith, said, "The Directors believe the support of the Loan Note holders who have agreed to rollover into the 2021 Loan Note reflects the considerable progress made by Prospex over the last 12 months.  In March 2021, we completed the acquisition of a 49.9% interest in El Romeral gas and power operation in Spain, which adds three producing wells and an 8.1 MW power station to Prospex's portfolio.  In April 2021, full environmental approval was received for the development of the Selva Malvezzi Gas-Field ('Selva') in northern Italy, which paves the way for the grant of a full production licence from Italy's Economic Development Ministry. 

"Following environmental approval, development and preliminary work has now commenced to prepare Selva, which has gross gas reserves of 13.3bcf (2P), for production in mid-2022. Together with ongoing preparatory and permitting work for a drilling campaign at El Romeral targeting an increase in gas supply at the project to bring capacity utilisation at the power plant closer to 100%, there is much to look forward to as we focus on building a highly cash generative business focused on European gas and power opportunities."

Further Information on the Subscribers and the 2021 Loan Note

The £321,680.68 2021 Loan Notes have been issued to eight individual subscribers, including the following two Directors of the Company:

Under the terms of the 2021 Loan Notes, the Company can elect to pay the interest in Euros by giving 10 business days' notice. 2021 Loan Note holders can elect, on a change of control of the Company, where a single party has over 50% of the issued share capital of the Company, to convert some or all of their 2021 Loan Notes into ordinary shares at the prevailing market price.

The Company can elect to repay the 2021 Loan Notes in full or part at any time by giving the holders 30 days' notice otherwise the Company shall repay the 2021 Loan Notes in three equal instalments on 31 December 2022, 30 June 2023, and finally 31 December 2023.

Related Party Transaction

The issue of the 2021 Loan Notes to Bill Smith and James Smith is a related party transaction pursuant to Rule 13 of the AIM Rules for Companies. The Directors independent of the transaction, being Edward Dawson and Richard Mays, having consulted with the Company's Nominated Adviser, Strand Hanson Limited, consider that the terms of Bill Smith and James Smith's participation in the 2021 Loan Note subscription to be fair and reasonable insofar as the Company's shareholders are concerned.

This announcement contains inside information.

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For further information visit www.prospexoilandgas.com or contact the following:

Notes

Prospex Energy PLC is an AIM quoted investment company focussed on high impact onshore and shallow offshore European gas and power opportunities. The Company acquires undervalued projects and then applies low-cost re-evaluation techniques to identify and de-risk prospects.  Prospex currently holds a portfolio of three projects: the Podere Gallina Permit in Italy where first gas at the Selva field is targeted for 2021; the El Romeral gas and power project in Spain, which includes three producing wells that supply gas to a 100% project-owned 8.1MW power plant; and the large scale Tesorillo gas project in southern Spain, which has the potential to hold gross un-risked Prospective Resources of 830 Bcf of gas (Best Estimate), with upside in excess of 2 Tcf. The Company's strategy is to rapidly scale up gas production in the short term to generate internal revenues that can then be deployed to develop the asset base and increase production further.