19 September
2005
BowLeven
Plc
(“BowLeven” or the
“Company”)
Placing of
8,500,000 new Ordinary Shares to raise £55.25m at a price of 650p per share
and
Notice of
Extraordinary General Meeting
BowLeven is
pleased to announce that it is raising £55.25 million (before expenses) by way
of a placing (the “Placing”) to new and existing investors of 8,500,000 new
Ordinary Shares of 10p each at an issue price of 650p per Ordinary Share to
provide additional funds to enhance the development of its
business.
Highlights:
·
Share placing to
raise £55.25 million (approximately £53.09m net of expenses).
·
The capital raised
will provide the Group with additional funds to further enhance the development
of its business and to fund a work programme for its exploration assets in
·
John Morrow, BG
Group’s former Project Director for the
Commenting on the
Placing,
Shareholders
are today being sent a circular (“Circular”), the purpose of which is to provide
shareholders with further information on the Placing, which is being carried out
on a non pre-emptive basis, and to convene an extraordinary general meeting
(“EGM”) for the purpose of granting the directors of the Company the necessary
authority to effect the Placing. The Notice of EGM, which will be held at The
George Hotel,
Copies of the
Circular are being posted to shareholders today, and are available from the
Company’s Nominated Adviser and Broker, Noble & Company Limited (“Noble”),
120 Old Broad Street, London, EC2N 1AR, free of charge, from today and for a
period of one month following the date of admission of the New Ordinary
Shares.
For further
information please contact:
Adam Westcott,
Noble & Company Limited
0131 225 9677
Neil Bennett,
Maitland
020 7379 5151
The following text
is an extract from the Circular that is expected to be dispatched to
shareholders today.
Introduction
The Company has
today announced proposals for a capital raising to provide the Group with
additional funds to further enhance the development of its business and to fund
its ongoing work programme for its exploration assets in
The Company is
seeking to raise £55.25 million before expenses as set out herein. This is to be
effected by means of the Placing of 8,500,000 new Ordinary Shares in the capital
of the Company at an issue price of 650p per new Ordinary Share which have been
conditionally placed by Noble with certain new and existing investors.
Due to the size of
the Placing relative to the Company’s existing authorised share capital and authorities to allot shares, the Placing
is conditional (amongst other things) upon the passing of certain resolutions by
the Company’s shareholders at an extraordinary general meeting of the Company. A
summary of these resolutions is set out in the Circular. The Directors have
convened the EGM at which shareholders will be asked to consider and, if thought
fit, pass the resolutions set out in the Notice of EGM. The Placing is also
conditional on Admission of the Placing Shares to trading on AIM, a market
operated by the London Stock Exchange Plc (and which is the market on which the
Company’s existing issued Ordinary Shares are trading), occurring by 18 October
2005 (or such later date as Noble and the Company shall agree provided that this
is no later than 1 November 2005). The Placing Shares are equivalent to
approximately 28.7 per cent. of the Company’s enlarged issued share capital
following Admission and the Placing Price represents a discount of approximately
14.2 per cent. to the closing mid market price of an existing issued Ordinary
Share on 16 September 2005, the latest practicable date prior to the production
of the Circular.
The Company is
also proposing to amend the Share Option Scheme to permit, in certain
circumstances, the grant of options at below the market value subsisting on the
date of grant of the option. Such amendments are subject to the passing of
resolution 4 set out in the Notice of EGM.
Finally, the
Company is proposing to amend its Articles of Association so as to extend the
circumstances in which a director of the Company can be indemnified by the
Company. This proposal, set out in resolution 5 of the Notice of EGM, follows
changes to a director’s indemnity provisions introduced by changes to the
Companies Act 1985 effective from 6 April 2005.
The purpose of the
Circular is to provide shareholders with information about the proposed Placing,
the amendment to the Share Option Scheme and the amendment to the Articles of
Association and to explain why the Directors consider these proposals to be in
the best interests of the Company.
Application will
be made to the London Stock Exchange Plc for the Placing Shares to be admitted
to trading on AIM. It is expected that, following the passing of the Placing
Resolution at the EGM, dealings in the Placing Shares will commence on or around
18 October 2005. Subject to the passing of the Placing Resolution and Admission
becoming effective not later than 1 November 2005, the Placing Shares will rank,
pari passu, with the existing Ordinary Shares in the Company.
Under the
terms of the engagement letter entered into between the Company and Noble in
connection with the Placing, Noble has agreed to use its reasonable endeavours
to procure placees for the Placing Shares at the Placing Price. The Placing is
not being underwritten.
Announcement of
Results
The Company is
currently completing its formal audit and the financial results for the 12
months to 30 June 2005 are expected to be released on or around 20 October 2005.
Trading Since
Admission
The Company raised
a total of approximately £30m (after expenses) in November and December 2004.
These funds were raised to:
·
fund the
acquisition of 3D seismic over the Etinde Permit;
·
fund the drilling
of up to three wells in Block 7;
·
assess the
exploration potential of prospects, leads and plays across the Etinde
Permit;
·
provide working
capital for operations for at least 12 months; and
·
repay existing
liabilities
all as set out in
more detail in the Company’s Admission Document of 1 December 2004.
Since the
Company’s shares were admitted to trading on AIM on 7 December 2004, the Company
has:
·
acquired 3D
seismic data over Block 7 and parts of Blocks 5 and 6 of the Etinde Permit;
·
completed fast
track interpretation of both the newly acquired 3D seismic data and existing
seismic and drilling data and is continuing with the ongoing process of
interpretation of that data;
·
commenced
negotiations with the relevant Cameroon authorities in respect of fiscal and
economic terms for the Etinde Permit which it intends to conclude as soon as
possible; and
·
selected two
exploration prospects for the 2005 drilling programme which is expected to
commence in early October. The GlobalSantaFe rig ‘Adriatic IX’ will be on
contract to the Group at the end of September 2005 and an operations base has
been set up in Douala to support the drilling programme.
The 2005 drilling
programme comprises two exploration wells. If successful, the results of these
two wells will have a major impact on reserve estimates and hence the commercial
prospects of Block 7. Previously, nine wells have been drilled on the
Block. Of the eight wells drilled
by previous operators, seven encountered hydrocarbons on the flanks of the
channel systems in the Block. One well was a dry hole. In March 2004, the Group
drilled a commitment well, Manyu-1, which also encountered hydrocarbons. The
combination of these wells and the newly-acquired 3D seismic has provided a
clear understanding of the reservoir characteristics of the channel systems. The
two wells in the 2005 programme will provide new data to assist in the
interpretation of the 3D seismic covering previously undrilled prospects in this
Block. This data, when evaluated in conjunction with data on the previously
drilled eight wells, will provide the basis for planning the 2006/07 exploration
and appraisal programme on Block 7.
On Admission the
Group intended to negotiate a gas supply contract for a proposed
gas-to-electricity (“GTE”) power plant project. The Group has since appointed
Energy Contract Company in Twickenham, Middlesex, to begin negotiations with
regards to a GTE contract.
Farm-in
Strategy
The Company
announced in its Admission Document that it intended to develop partnerships
with other oil and gas companies in order to further develop its strategy.
BowLeven has since developed a farm-in strategy which will enable the Company to
retain operator status and achieve the following objectives:
·
reduce
risk;
·
provide additional
technical capability;
·
provide funds for
the development phase; and
·
reduce future cash
requirements from shareholders.
Work Programme for
2006/07
The seismic
programme is focussed on completing the interpretation of the 3D seismic data
over Block 7 and the acquisition, processing and interpretation of seismic data
over Blocks 5 and 6.
Subject to the
results of its 2005 drilling programme the Company will consider several
appraisal and development drilling options for 2006/07 including:
·
Isongo South
appraisal wells (gas/condensate);
·
Biafra South
appraisal well (oil);
·
Manyu-2 appraisal
well (oil);
·
Isongo D and E
appraisal wells (gas/condensate);
·
Isongo C appraisal
well (gas/condensate); and
·
Sanaga Sud: one
gas appraisal well and a development well (if the award of this licence area to
EurOil Limited is confirmed by the Government of Cameroon).
Exploration
targets identified to date by the Company include:
·
additional
·
additional Isongo
gas/condensate prospects/plays in Block 7; and
·
oil and gas
exploration in Blocks 5 and 6 (subject to the acquisition and interpretation of
3D seismic data).
Reasons for the
Placing and Use of Proceeds
The Directors
believe that there is currently an opportunity to raise funds from a small
number of institutional and other investors at the present time. Your Board has
therefore decided to effect the fundraising by way of the Placing following a
limited and targeted marketing exercise, rather than by offering all
shareholders the opportunity to acquire further shares. The Directors believe
that the additional cost and delay incurred in the production of a prospectus
(which would have to comply with detailed contents requirements and require
review by the UK Listing Authority) in connection with any such offer would not
have been in the best interests of the Company.
The net proceeds
of the Placing are estimated at £53.09 million. The funds will be used
to:
·
secure drilling
rigs for a 2006/07 drilling programme;
·
drill up to six
wells on the Etinde Permit area;
·
acquire 3D seismic
over Blocks 5 and 6 of the Etinde Permit;
·
process and
interpret the seismic data acquired;
·
fund further GTE
planning; and
·
fund further
working capital.
Terms of the
Placing
On 16 September
2005, the Company and the Directors entered into a placing agreement with Noble
(“the Placing Agreement”) pursuant to which Noble was appointed the Company’s
agent to use its reasonable endeavours to procure subscribers for the Placing
Shares at the Placing Price.
The Placing
Agreement contains certain indemnities from the Company and certain warranties
from the Company and the Directors, breach of which will entitle Noble to
terminate its placing obligations.
The Placing is
conditional, inter alia, on:
·
the passing of the
Placing Resolutions;
·
there having been
no material breach of the warranties or indemnities given to Noble by the
Company and/or the Directors in the Placing Agreement; and
·
Admission taking
place on 18 October 2005 or such later date as Noble and the Company shall agree
but in any event not later than 1 November 2005.
Amendment of the
Share Option Scheme
The current rules
of the Share Option Scheme provide that the price at which Ordinary Shares
subject to an option (both for any Approved Option and any Unapproved Option)
may be acquired on exercise of the option, shall be not manifestly less than the
market value of the shares at the date on which the option is granted. For shares which are quoted on AIM, the
market value is taken as the average mid-market closing price of the shares so
quoted on the day prior to the date of grant of the option.
In the current
business environment, companies are often required, when seeking to recruit key
employees and directors, to set out their intentions to such employees and
directors regarding proposed grants of share options, including details of the
number of shares under option and their exercise price, based on the market
value of the shares at the date on which an offer of employment is made. In the event that the market value of
the Ordinary Shares rises between the date of such offer and the actual date of
appointment/grant of the option, the Directors believe that it is in the best
interests of the Company that they should have the discretion to grant options
at the exercise price initially offered to the prospective employee/director
even if this is lower than the subsequent prevailing market value. The proposed
amendment to the Share Option Scheme as it applies to Unapproved Options, as set
out in resolution 4 of the Notice of EGM, will give the Directors this
flexibility.
It should be
emphasised that the exercise price for Approved Options under the Share Option
Scheme remains unchanged, and the exercise price for such options granted as
Approved Options cannot be less than the market value on the date of grant of
the Approved Option.
Appointment of new
Director
John Morrow (aged
51) joined the Company on 7 September 2005. It is intended that he will be appointed
as a director of the Company following the announcement of the annual results to
30 June 2005 which is expected on or around 20 October 2005. He will be appointed as the Company’s
Technical Director. Mr Morrow has
25 years experience in the oil and gas industry. Immediately prior to joining the
Company, he was BG Group Plc’s Project Director for the Middle East and was
responsible for developing the BG Group LNG (Liquified Natural Gas) Project in
The terms of John
Morrow’s employment with the Company provide for a basic salary of £175,000 per
annum. He will also be entitled to
participate in the Company’s discretionary performance bonus scheme. His employment can be terminated upon 12
months notice.
Following his
appointment it is intended that Mr Morrow will be issued with options over
275,000 Ordinary Shares in the Company.
Approved Options up to a value of £30,000 will be issued at the market
price ruling on the date of grant of such options with the balance of the share
options being Unapproved Options granted at a price of 530p per Ordinary Share,
being the average of the Company’s share price over the period of 20 days prior
to 22 July 2005, (being the date Mr Morrow agreed to join the
Company).
Indemnities
for directors and officers
An
amendment to the Companies Act 1985 (“the Act”), which came into force on 6
April 2005, has widened the permitted scope of an indemnity which can be granted
by a company to its directors and officers. In particular, the new legislation
(section 19 of the Companies (Audit, Investigations and Community Enterprise)
Act 2004) now allows a company to indemnify directors for liabilities to third
parties even where that director is unsuccessful in defending the claim against
him and to pay certain directors’ defence costs as they are incurred in civil or
criminal cases. The prohibition
contained in the previous legislation has been amended so that it applies only
to auditors and the new legislation allows companies to indemnify the company
secretary and other officers, as well as directors. Indemnities cannot extend to liability
incurred by the indemnified person to the company or any associated company of
which he is a director or officer, to fines in criminal proceedings or penalties
imposed by regulatory authorities, to costs incurred in criminal proceedings
where the director is convicted, or to costs incurred in civil proceedings
brought by the company or an associated company where judgment is given against
the individual concerned.
Article
143 of the Company’s Articles of Association currently provides an indemnity by
the Company in favour of the directors, the company secretary and the Company’s
other officers and its auditors and managers in the limited circumstances
permitted under the previous legislation.
The
Board believes that it is in the Company’s best interests to take advantage of
the change in the law. Resolution 5
is a special resolution to replace the existing Article 143 with a new Article
143 which will take advantage of the changes to the Act. To ensure that the Board is able to
exercise its powers under the new article, notwithstanding directors’ personal
interests in the provision of the indemnities, the proposed new Article 143
allows each of the directors to vote and be counted in the quorum at any meeting
of the Board or a committee of the Board considering a proposal for an indemnity
unless he is to receive a privilege or benefit not generally available or
awarded to any other director.
Subject
to the passing of resolution 5, the Board intends to enter into deeds of
indemnity with each director to reflect the provisions of the amended Act and
the proposed new Article 143. Any
such indemnities would not apply to any claim arising out of the indemnified
person’s fraud, wilful default, gross negligence or breach of fiduciary
duty.
Extraordinary
General Meeting
Included in the
Circular is a notice convening the EGM of the Company to be held at The George
Hotel,
The
Placing Resolutions, which are resolutions 1 to 3, propose:
(a) to increase the Company’s authorised
share capital from £3,000,000 to £5,000,000;
(b) to grant the Directors a general
authority pursuant to section 80 of the Companies Act 1985 to allot the Placing
Shares (as defined in the Circular and to allot the remaining authorised but as
yet unissued share capital of the Company); and
(c) to
disapply statutory pre-emption rights in respect of the Placing Shares and in
addition, further securities not exceeding 15 per cent. of the issued share
capital of the Company as enlarged by the issue of the Placing Shares.
Resolution 4
proposes the amendment to the Share Option Scheme.
Resolution 5
proposes the amendment to the Company’s Articles of Association.
Action to be taken
A form of proxy
for use at the EGM is enclosed with the Circular. The form of proxy should be
completed and signed in accordance with the instructions on it and returned to
the Company’s registrars, Park Circus Registrars Limited, James Sellars House,
Recommendation
The Directors
consider the Placing; the proposed amendment to the Share Option Scheme; and the
proposed amendment to the Articles of Association of the Company to be in the
best interests of the Company and its shareholders as a whole and unanimously
recommend shareholders vote in favour of the resolutions as set out in the
Notice of EGM, as your Directors intend to do or procure to be done in
respect of their beneficial holdings of Ordinary Shares, which amount, in
aggregate, to 2,886,303 Ordinary Shares, representing approximately 13.67 per cent. of the current issued
share capital of the Company.
- ENDS
-