TIDMCAB
RNS Number : 4024R
Cabot Energy PLC
29 October 2019
Prior to publication, the information contained within this
announcement was deemed by the Company to constitute inside
information as stipulated under the Market Abuse Regulations (EU)
No. 596/2014. With the publication of this announcement, this
information is now considered to be in the public domain.
29 October 2019
Cabot Energy Plc
("Cabot", the "Group" or the "Company")
Proposed cancellation of admission of Ordinary Shares to trading
on AIM
Proposed re-registration as a Private Limited Company and Update
to Articles of Association
Corporate Update
Cabot Energy Plc (AIM: CAB), the AIM quoted oil and gas company
focussed on creating predictable production growth in Canada,
announces the proposed cancellation of admission of its ordinary
shares of 1p each ("Ordinary Shares") to trading on AIM (the
"Cancellation"), re-registration as a private limited company (the
"Re-registration") and adoption of updated articles of association
("Updated Articles"), conditional on approval by shareholders.
Following a careful review of the benefits and drawbacks of
being an AIM quoted company, the board of directors of Cabot (the
"Board") has concluded that the cancellation of its admission to
trading on AIM is in the best interests of both shareholders and
the Company. The Company therefore announces that it intends to
seek shareholder approval for the cancellation of the admission of
its Ordinary Shares to trading on AIM.
Circular and General Meeting
The Board is proposing a resolution to approve the Cancellation
(the "Cancellation Resolution") at a general meeting to be held in
November 2019 (the "General Meeting").
A circular is being prepared and will shortly be posted to
shareholders (the "Circular") setting out the reasons for the
proposed Cancellation, Re-registration and adoption of Updated
Articles. It also explains why the Board unanimously considers the
proposed Cancellation, Re-registration and Adoption of Updated
Articles to be in the best interests of the Company and its
shareholders as a whole and why it is recommending that
shareholders should vote in favour of the proposed Cancellation at
the General Meeting. The notice convening the General Meeting will
also be set out in the Circular.
The Ordinary Shares will continue to be admitted to trading on
AIM prior to the proposed Cancellation.
The independent directors of the Company, being James Dewar,
Rachel Maguire and Paul Lafferty (the "Independent Directors"),
believe that the proposed Cancellation is in the best interests of
the Company and all shareholders and intend to unanimously
recommend that shareholders vote in favour of the Cancellation
Resolution at the General Meeting. As such, the Independent
Directors have waived the restriction imposed by the Relationship
Agreement between Cabot and the Company's majority shareholder High
Power Petroleum LLC ("H2P") to allow H2P to vote on the
Cancellation Resolution at the General Meeting. The Independent
Directors believe that due to the Company's current financial
position, if the Cancellation Resolution is not approved by
shareholders, given the burden of public company costs, the Group
may not be able to continue operations and trading in the Ordinary
Shares would be at risk of suspension.
As stated in the Interim Results announced on 30 September 2019,
H2P committed to participating in a second subscription tranche of
at least US$0.35 million in October 2019 (totalling a minimum
subscription of US$0.7 million in the current funding round). Cabot
also stated that the Company intended to enable all shareholders to
participate in this funding round via an open offer. Further to
today's announcement, the Company will not now be proceeding with
an open offer, as the Company believes that the open offer
transaction fees and costs will outweigh the expected open offer
gross proceeds at this time, based upon initial enquiries with
significant non-H2P shareholders. However, H2P has affirmed its
commitment to providing the second subscription tranche of US$0.35
million which will provide the Company with the necessary funds to
proceed with its Summer Work Programme. However, this is subject to
a final assessment at that time, by H2P, of the merits of, and
business case for, further investment.
The Cancellation is conditional, pursuant to Rule 41 of the AIM
Rules for Companies (the "AIM Rules"), upon the approval of not
less than 75 per cent of the votes cast by shareholders (whether
present in person or by proxy) at the General Meeting.
In accordance with Rule 41 of the AIM Rules, the Company will
notify the London Stock Exchange of the date of the proposed
Cancellation prior to the publication of the Circular and a
detailed timetable of the principal events leading up to the
Cancellation will be included in the Circular.
Background to, and reasons for, the Cancellation
The Directors have conducted a review of the benefits and
drawbacks to the Company and its shareholders in retaining its
quotation on AIM and believe that the Cancellation is in the best
interests of the Company and its shareholders as a whole. In
reaching this conclusion, the Board has consulted certain
shareholders and has considered the following key factors, amongst
others:
-- The Board believes that the Company is unlikely to attract
material investment from third party equity investors (i.e.
investors with no current connection to the Company) in these
current market conditions. The Board believes this is largely due
to historical challenges faced by the Company as well as a drop in
investment "appetite" in oil and gas companies globally,
specifically fossil fuels.
-- In order to put the Company in a position whereby providers
of finance may be more inclined to advance funds, the Board
believes that a material reduction in corporate overheads is
required. Hence the Board is of the view that for the foreseeable
future, the considerable cost, management time and the legal and
regulatory obligations associated with maintaining the Company's
admission to trading on AIM are materially disproportionate to the
benefits to the Company. The Company has estimated that a delisting
could save Cabot up to approximately US$1 million per annum in
overhead and transaction costs. This is significant for all
shareholders given the Company's current market capitalisation and
the Board believes that these funds could be better invested in the
workover programmes and production improvements that are the basis
for future growth.
-- The current shareholding structure of Cabot is such that the
Company has a limited free float and liquidity in the Ordinary
Shares, with the consequence that the AIM quotation does not offer
investors the opportunity to trade in meaningful volumes or with
frequency within an active market.
-- The Board also believes that a delisting could allow for a
period of restructuring, cost reduction and general repositioning
of Cabot that would benefit all shareholders in the longer term.
Following this period of restructuring, the Board could be in a
better position to consider re-listing the Company in the future,
in London or elsewhere.
-- Even after the Cancellation, the Board is committed to
continued rigorous corporate governance procedures for the
protection of all shareholders and investors.
-- The Board believes that it can make satisfactory arrangements
for shareholders to freely transfer their shares periodically via
Asset Match Limited, a secondary market dealing facility (see below
for further details).
Following careful consideration, and having consulted with
certain shareholders, the Board has concluded that it is in the
best interests of the Company and shareholders to seek the proposed
Cancellation at the earliest opportunity in line with AIM Rule
41.
Process for, and principal effects of, the Cancellation
The Board is aware that certain shareholders may be unable or
unwilling to hold Ordinary Shares in the event that the
Cancellation is approved and becomes effective. Such shareholders
should consider selling their Ordinary Shares in the market prior
to the Cancellation becoming effective.
Under the AIM Rules, the Company is required to give at least 20
clear Business Days' notice of Cancellation. Additionally,
Cancellation will not take effect until at least five clear
Business Days have passed following the passing of the Cancellation
Resolution. A timetable of the principal events leading up to the
Cancellation will be included in the Circular.
The principal effects that the Cancellation will have on
shareholders include the following:
-- There will no longer be a formal market mechanism enabling
shareholders to trade their Ordinary Shares on AIM (or any other
recognised market or trading exchange).
-- However, the Ordinary Shares will remain freely transferable
and an auction-based secondary market trading facility is intended
to be set up through Asset Match Limited for a period following
Cancellation (see below for further details). Notwithstanding this,
the Ordinary Shares may be more difficult to sell compared to
shares of companies traded on AIM.
-- It may be more difficult for shareholders to determine the
market value of their investment in the Company at any given
time.
-- The Company will no longer be subject to the AIM Rules and,
accordingly, shareholders will no longer be afforded the
protections given by the AIM Rules - in particular, the Company
will not be bound to:
o Make any public announcements of material events, or to
announce interim or final results; comply with any of the corporate
governance practices applicable to AIM companies; announce
substantial transactions and related party transactions; or comply
with the requirement to obtain shareholder approval for reverse
takeovers and fundamental changes in the Company's business.
o The Company will cease to retain a nominated adviser and
broker.
o The Cancellation might have either positive or negative
taxation consequences for shareholders (shareholders who are in any
doubt about their tax position should consult their own
professional independent adviser immediately).
The Board intends to continue to maintain the Company's website
(www.cabot-energy.com) and to post updates on that website from
time to time, although shareholders should be aware that there will
be no obligation on the Company to include the information required
under AIM Rule 26 or to update the website as required by the AIM
Rules.
The Company will remain registered with the Registrar of
Companies in England & Wales in accordance with and subject to
the Companies Act 2006, notwithstanding the Cancellation.
Shareholders should also note that the Takeover Code (the "Code")
will continue to apply to the Company following the Cancellation
for the period of 10 years from the date of Cancellation (subject
to the Re--registration occurring).
Shareholders should note that, if the Cancellation becomes
effective (and subject to the Re-registration occurring), after the
expiry of 10 years from the date of the Cancellation they will not
receive the protections afforded by the Code in the event that
there is a subsequent offer to acquire their Ordinary Shares. Brief
details of the Panel on Takeovers and Mergers (the "Panel"), the
Code and the protections given by the Code will be included in the
Circular.
Following the Cancellation it will still be possible to hold
Ordinary Shares in uncertificated form in CREST.
Before giving consent to the Re-registration of the Company as a
private company, shareholders may want to take independent
professional advice from an appropriate independent financial
adviser.
The resolutions to be proposed at the General Meeting include
the adoption of the Updated Articles with effect from completion of
the Cancellation. A summary of the principal changes being made by
the adoption of the Updated Articles will be included in the
Circular.
The above considerations are not exhaustive and shareholders
should seek their own independent advice when assessing the likely
impact of the Cancellation on them.
Transactions in Ordinary Shares
Shareholders should note that they are able to trade in the
Ordinary Shares on AIM prior to a Cancellation.
The Board is aware that the proposed Cancellation, should it be
approved by shareholders at the General Meeting, would make it more
difficult for shareholders to buy and sell Ordinary Shares should
they wish to do so. Therefore, following the Cancellation, the
Company intends to put in place an auction-based secondary market
trading facility with Asset Match Limited to assist shareholders to
trade in the Ordinary Shares from the day of Cancellation. Asset
Match Limited is authorised and regulated by the Financial Conduct
Authority. This facility will initially be established by the
Company for a minimum of one year from the date of Cancellation and
will be reviewed by the Company on a quarterly basis thereafter.
Shareholders should note that there can be no guarantee that this
facility will be available on a continuous basis, or at all, after
one year from the Cancellation date.
Re-registration
Following the proposed Cancellation, the Board believes that the
requirements and associated costs of the Company maintaining its
public company status will be difficult to justify and that the
Company will benefit from the more flexible requirements and lower
overhead costs associated with private limited company status. It
is therefore proposed to re-register the Company as a private
limited company. In connection with the Re-registration, it is
proposed that the Updated Articles be adopted to reflect the change
in the Company's status to a private limited company. The principal
effects of the Re-registration and the adoption of the Updated
Articles on the rights and obligations of shareholders and the
Company will be summarised in the Circular.
Application will be made to the Registrar of Companies for the
Company to be re-registered as a private limited company.
Re-registration will take effect when the Registrar of Companies
issues a certificate of incorporation on re-registration. The
Registrar of Companies will not issue the certificate of
incorporation on Re-registration until the Registrar of Companies
is satisfied that no valid application can be made to cancel the
resolution to re-register as a private limited company.
Current Financial Position
Sales volumes in Q3 2019 ("Q3") totalled 37,987 barrels ("bbls")
(413 barrels of oil per day ("bopd")) and an average Q3 Edmonton
light oil sales price (after transportation costs and crude oil
marketing fees) of US$45/bbl, resulting in Q3 revenues of US$1.7
million. The Edmonton average price discount to West Texas
Intermediate in Q3 was approximately 8%. The Group's unaudited cash
balance as at 25 October 2019 was US$1.125 million, following the
receipt of oil revenues for October 2019. The H2P gross
subscription proceeds of US$0.35 million (GBP0.28 million), as
announced by the Company on 19 September 2019, have been received
in full although H2P has not yet been issued with the shares
relating to this subscription, as the issue of these shares is
conditional upon shareholders approving a resolution at the General
Meeting. In addition, the Company has received the payment from
Shell E&P S.p.A. pursuant to the agreement reached with the
Company to withdraw from the Cascina Alberto onshore exploration
licence in the Po Valley, Northern Italy, as announced by the
Company on 26 September 2019.
H2P has affirmed its commitment to providing a second
subscription tranche of US$0.35 million which is expected to be
received during November 2019 and which will provide the Company
with the necessary funds to proceed with its Summer Work Programme.
Receipt of H2P's proposed second subscription tranche and the
increased cash flows resulting from a successful Summer Work
Programme are expected to provide the Group with sufficient
liquidity until late November 2019.
Canadian Operations
Further to the Interim Results RNS dated 30 September 2019, the
Company has commenced the Summer Work Programme activities of up to
10 well repairs and stimulations, with a budget of C$1 million to
restore and increase production levels. These activities are being
optimised around lowest cost of operation and accessibility to well
locations and shall continue until early December 2019. The
successful execution of such activities shall progress the
unlocking of development debt facilities such as the non-binding
term sheet entered into with a Calgary-based private energy lender
as detailed in the Company's announcement of 2 September 2019.
-Ends-
Enquiries:
Cabot Energy Plc +44 (0)20 7469 2900
James Dewar, Chairman
Scott Aitken, CEO
Petro Mychalkiw, CFO
SP Angel Corporate Finance LLP +44 (0)20 3470 0470
Nominated Adviser and Broker
David Hignell, Richard Hail, Richard
Redmayne
Luther Pendragon +44 (0)20 7618 9100
Financial PR
Harry Chathli, Alexis Gore, Joe Quinlan
Note to Editors:
Cabot Energy Plc (AIM: CAB) is an oil and gas company focussed
on creating predictable production growth in Canada. Comprehensive
information on Cabot and its oil and gas operations, including
press releases, annual reports and interim reports are available
from Cabot's website: www.cabot-energy.com
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCLFFIVIILTFIA
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October 29, 2019 03:00 ET (07:00 GMT)
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