Proposed Conditional Placing

RNS Number : 7355O

San Leon Energy PLC

01 June 2015

 

1 June 2015

San Leon Energy PLC

("San Leon" or "the Company")

Proposed Conditional Placing and Share Capital Reorganisation

San Leon Energy plc ("the Company" or "San Leon"), the AIM listed company focused on oil and gas exploration in Europe and North Africa, announces a major fundraising pursuant to a proposed conditional placing (the "Placing") of New Ordinary Shares in the Company.  The Placing is subject to, inter alia:

·     shareholder approval at an Extraordinary General Meeting ("EGM") to be called shortly;

·     the Company undergoing a Share Capital Reorganisation consisting of subdivision and consolidation of the issued Existing Ordinary Shares resulting in New Ordinary Shares with a nominal value of €0.01 each to be approved at the EGM; and

·     the granting of a Rule 9 Waiver by the Irish Takeover Panel in relation to Tosca's subscription as described below.

Pursuant to the Placing, the Company has conditionally agreed to raise £29 million from existing and new shareholders by conditionally agreeing to place 36,250,000 New Ordinary Shares at a price of 80 pence per share (equivalent to 0.8p per Existing Ordinary Share before the Share Capital Reorganisation described below).  The Placing will therefore effect an increase in the issued share capital (adjusted for the Share Capital Reorganisation) of approximately 143%.

The Company has entered into a conditional placing agreement with Brandon Hill Capital Limited ("Brandon Hill") who is acting as bookrunner and broker to the Placing.

The Placing will put the Company in a position of strength with regard to existing and future operations and will fund growth.  San Leon is intent on transforming its focus from exploration to appraisal, development and production, thus securing operational cash flow. A full description of the use of Placing proceeds is contained in the second part  of this announcement.  The main reasons for the Placing are to:

·     enable the Company to retain the Barryroe NPI rather than monetising it to fund operations.  The Company expects to benefit from considerable cash flow arising out of the NPI, in excess of $700 million over the field life (based on internal economic calculation, using figures from the Providence 2013 CPR summary and current price projections);

·     provide any incidental capital, to develop the Rawicz and Siekierki fields.  Rawicz has been the subject of recent RNS statements on 22 February 2015, 6 March 2015 and 19 May 2015, describing the highly successful test results from the Rawicz-12 well, and the reserves allocated as a result;

·     enable commitment wells to be drilled onshore Morocco (on the Tarfaya licence, targeting gas in Tertiary channel sands, spudding Q3 2015) and in Albania (on the Durresi licence, targeting oil with associated gas in Burdigalian carbonates, from an onshore location to an offshore target, spudding Q4 2015);

·     allow the exploitation of other high value existing assets within the Company's portfolio;

·     provide general working capital; and

·     enable acquisitions where they would enhance the new Company strategy at a time when a proven Operator with liquidity is in a strong buying position.

The Company continues to undertake a significant review of its portfolio and costs, with the intention of materially lowering its cost base, and further details will be provided in due course.  This review will not affect the Company's core business.

Toscafund Asset Management LLP ("Tosca") has entered into a conditional placing commitment for the amount of £16 million as part of the Placing.  In addition to its current shareholding of approximately 22% in the Company, this investment would take Tosca's total shareholding after the Placing to approximately 41.5%.  An application for a Rule 9 Waiver  in relation to Tosca's proposed shareholding will be made to the Irish Takeover Panel. An EGM will be held to approve the Placing. The date of the EGM is subject to further notice, anticipated to be no later than 16 July 2105.

Whitman Howard has assisted the Company during discussions regarding the Placing with certain shareholders.

Oisin Fanning, San Leon Executive Chairman, commented:

"We are very grateful for the strong support of the existing and new investors in the Placing.  In particular, the proposed significant increase in Tosca's interest speaks volumes about their belief in the Company's future and growth prospects.  The funds will help transform San Leon into a cash-generating producer, and will bring other assets towards development.  The three existing assets expected to generate cash in the coming years (Rawicz, Siekierki and Barryroe) will be the foundation for significant growth and the creation of shareholder value."

For further information contact:

San Leon Energy plc  Oisin Fanning, Executive Chairman	[phone]
Brandon Hill Capital Oliver Stansfield Jonathan Evans  Whitman Howard (advisors) Niall Devins	[phone] [phone]
finnCap Ltd  Corporate Finance Matt Goode Christopher Raggett Corporate Broking Joanna Weaving	[phone]
Macquarie Capital (Europe) Limited Jon Fitzpatrick Nicholas Harland	[phone]
Westhouse Securities Ltd Nominated Adviser Richard Johnson Antonio Bossi	[phone]
Vigo Communications Financial Public Relations Chris McMahon Alexandra Roper	[phone]
Plunkett Public Relations Sharon Plunkett	[phone]

 www.sanleonenergy.com 

Proposed Conditional Placing of 36,250,000 New Ordinary Shares

Share Capital Reorganisation

and

Extraordinary General Meeting

1. INTRODUCTION

The Company is pleased to announce a conditional placing of 36,250,000 New Ordinary Shares (the " Placing Shares") with institutional and other investors at a placing price of 80p per New Ordinary Share, to raise approximately £29 million (before expenses) (the "Placing"). The Placing Price assumes, and the Placing is conditional (inter alia) upon, the approval and completion of the Share Capital Reorganisation, which is described further below, and is equivalent to 0.8p per Existing Ordinary Share. In addition, the Company presently has a very large number of Existing Ordinary Shares in issue, each of which has a nominal value of EUR0.05 (approximately 3.6p). In order to implement the Placing, the Company is proposing the Share Capital Reorganisation, which would consolidate every 100 of its Existing Ordinary Shares into one New Ordinary Share in order to reduce the number of shares in issue and reduce the effective nominal value of the Company's ordinary shares.

The Share Capital Reorganisation and the Placing are conditional inter alia upon the passing of the necessary Resolutions by the Company's shareholders at an Extraordinary General Meeting to be convened in due course. It is anticipated that the Extraordinary General Meeting will be held at the Herbert Park Hotel, Ballsbridge, Dublin 4, Ireland at 11.00 a.m. on or about 16 July 2015, but the location, time and date will be confirmed when the Circular convening the Extraordinary General Meeting is posted.  

Additionally, completion of the Placing would result in Tosca, which has conditionally agreed to subscribe for 20,000,000 Placing Shares (£16 million), holding a maximum of 41.5 per cent. of the Company's issued ordinary share capital. This would oblige Tosca to make a mandatory offer for the ordinary share capital of the Company not held by Tosca under Rule 9 of the Irish Takeover Rules unless a waiver of such obligation is granted by the Takeover Panel and such Rule 9 Waiver is approved by the Company's Independent Shareholders at the Extraordinary General Meeting. Accordingly, the Company will apply to the Takeover Panel to obtain a Rule 9 Waiver under the Irish Takeover Rules in relation to Tosca's participation in the Placing.  If the Rule 9 Waiver is not granted by the Takeover Panel or if the Rule 9 Waiver is not approved by Independent Shareholders at the Extraordinary General Meeting then Tosca would not be obliged to participate in the Placing and the proceeds of the Placing would be only £13 million. Further details of the Rule 9 Waiver are set out below.

Application will be made to AIM for the New Ordinary Shares (including the Placing Shares) to be admitted to trading on AIM which, subject to the passing of the Resolutions, is anticipated to be on 8.00 a.m. on 17 July 2015 ("Admission").

2. BACKGROUND TO AND REASONS FOR THE PLACING AND STRATEGIC OPPORTUNITIES

Existing Operations

Barryroe NPI (4.5 per cent. Net Profit Interest)

Over the last two years, the Company has received a number of expressions of interest in its 4.5 per cent. net profit interest in the Barryroe field in the Celtic Sea, offshore Ireland (the "Barryroe NPI"). Providence Resources is the operator of this field and has conducted extensive farm-out efforts over the past two years, led by their advisors Rothschilds. Currently there has been no confirmed offer to farm in to the Barryroe field. Rather than accept an offer for the Barryroe NPI, which in the management's view, considering current energy market conditions, would be considerably below its worth, the Company has determined to retain the Barryroe NPI and conduct the Placing in order to retain shareholder value and access the considerable expected cashflow from the Barryroe NPI which is estimated to commence in 2018.

Rawicz (35 per cent. interest)

In February 2015, the Company and its joint venture partners, Palomar Natural Resources ("Palomar"), made a significant gas discovery at the Rawicz field in Poland, capping over five years of exploration efforts by San Leon in one of the highest-priced gas markets in Europe. This is expected to be the largest gas development in Poland for 20 years, and first gas is expected by early 2016 thereby forming the Company's first material cash flow.

Siekierki (35 per cent. interest)

Operational work on the Siekierki field, also in partnership with Palomar, is expected to begin in the coming months and is intended to form the second cash flow stream from existing assets located therein.

While well activity in 2015 on both assets carries no up-front cost to the Company in accordance with the terms of the carry agreed with Palomar, modest investment is required for facilities and pipelines unless otherwise funded by the expected debt financing. Well activity on three wells will be carried by Palomar and envisages workovers on existing wells (such as Trzek-1, Trzek-2H and Trzek-3H) based upon the results of the geotechnical evaluation programme of each well.

Other high-impact assets, and in particular the Baltic Basin shale licences in Poland, continue to attract material farm-in interest despite the challenging industry environment.

Morocco and Albania

Morocco and Albania are both attractive assets for the Company, and carry work commitments. In order to meet these work commitments a well will be drilled on the Tarfaya licence (onshore Morocco, 100 per cent. paying interest), and one on the Durresi licence (Albania, drilling from an onshore location to an offshore target, 100 per cent. interest).

Further details of the Company's operations can be found on the Company's website, www.sanleonenergy.com.

Strategic Opportunities

The dramatic drop in oil prices over the last six months has fundamentally altered the commercial environment for all international oil and gas companies. Product prices are down, which has led to a decrease in the costs of services and asset values. For an entity with the access to capital, it is an ideal time to exploit existing development assets to target cash flow and potentially to acquire development and low-risk exploration and appraisal assets. The Placing is intended to alter the long-term strategy of the Company as in the future the portfolio balance will be weighted towards asset development and production (in order to secure cash flow) rather than early-stage exploration.

The Company sees opportunity, as an established operator with its own onshore 3D seismic subsidiary, in acquiring development or producing assets, or low-risk exploration assets in the current buyers' market. Discussions are advanced with several groups regarding the provision of debt financing for producing assets. The Company is also evaluating the potential to expand its North African portfolio of assets to other parts of Africa.

3. USE OF PROCEEDS

The Company intends to use the net proceeds from the Placing as follows:

·      To provide any capital requirements to target cash flow from the Rawicz and Siekierki fields. Given that the next well on Rawicz will be at no up-front cost to the Company, and activity on the first three Siekierki wells is fully carried, such net capital requirement is likely to be £2 to 4 million, with cash flow from production expected to begin in 2016.  The intention is to secure project finance to cover most, or all, of these costs, so funds will be a back-up to such financing.

·      To drill some of the most promising prospects that the Company has generated over the past five years, including an onshore Tertiary play on the Tarfaya licence in Morocco (approximately £3 million), and a well on the Durresi block in Albania (where the offshore carbonate target will be accessed by directional drilling from an onshore location, approximately £5 million). Both wells are expected to be drilled in 2015.

·      To provide general working capital, including licence maintenance and technical evaluations.

·      To apply the balance of net Placing proceeds of up to £15 million to funding the Company's share of farmed-out projects should there be any such costs, as well as to target any low-risk acquisition opportunities in the current market climate.

Taking into account the net proceeds of the Placing, and conditional upon the Placing completing, the Directors are of the opinion that the Company has sufficient working capital for the foreseeable future, that is for at least 12 months from the date of Admission.

4. CURRENT TRADING AND PROSPECTS

The Company's development assets comprise Rawicz (35 per cent.), Siekierki (35 per cent.) and the Barryroe NPI, which management expects will start generating cash flow in 2016, with aggregate cash flow in excess of US$40 million per annum by the end of 2018. On the basis of the Company's internal estimates¹, the aggregate NPV10 (pre-tax) of these assets is expected to be in excess of US$400 million.

On 30 September 2014 the Company announced its interim results for the period ended 30 June 2014. Cash and cash equivalents, including restricted cash, at 30 June 2014 amounted to EUR20.9 million. It is expected that the Company's results for the year ended 31 December 2014 will be announced at the end of June 2015. At the period end, unaudited cash and cash equivalents, was approximately EUR7 million (restricted and unrestricted). Investors' specific attention is directed to the following recent market and operations updates made by the Company, which are available on the Company's website:

(i)            Rawicz - 12: Update and Field Reserves dated 19 May 2015.

(ii)           Rawicz - 12: Well Test Completion dated 6 March 2015.

(iii)         Rawicz - 12: Commercial Gas Discovery dated 25 February 2015.

(iv)          Operations Update dated 21 January 2015.

The Company announced on 26 May 2015, that it received the findings of the International Court of Arbitration of the International Chamber of Commerce, which provide for a total payment by Aurelian Oil & Gas (a subsidiary of San Leon) of approximately £13 million in relation to the purchase of Avobone Poland B.V.'s and Avobone N.V.'s (together "Avobone") 10 per cent. shares and loans in Energia Zachód Sp. z o.o., the titleholder of the Siekierki asset. The Company is filing an immediate appeal and will defend its position vigorously as it remains convinced that the case is substantially without merit.

Whilst the Company has sufficient cash on hand and other facilities to meet its current work commitments, the Board believes that the Placing funds will enable the Company to expand its operations and, together with revenue from production, will help cover the Company's financial requirements for the foreseeable future.

The Placing is conditional upon, amongst other things, the passing of the Resolutions and, accordingly if the Resolutions are not passed, the Placing will not complete. In such circumstances the Company would be required to seek alternative sources of funding in order to progress its proposed strategy.

¹ Estimates generated by the Company and not independently verified by a competent person

5. DETAILS OF THE PLACING

The Company has today entered into a placing agreement (the "Placing Agreement") with Brandon Hill pursuant to which Brandon Hill has, as agent for the Company, placed 36,250,000 New Ordinary Shares with institutional and other investors at a placing price of 80p per New Ordinary Share, to raise approximately £29 million (before expenses). The Placing Price assumes, and the Placing is conditional (inter alia) upon, the approval and completion of the Share Capital Reorganisation and the passing of the other necessary Resolutions at the EGM, and is equivalent to 0.8p per Existing Ordinary Share, representing a discount of approximately 27 per cent. to the Company's closing mid-price of 1.1p on 29 May 2015, the last business day prior to the issue of this Announcement.

The Placing Shares will, if issued in full, represent approximately 58.8 per cent. of the issued ordinary share capital of the Company as it is expected to be immediately following completion of the Share Capital Reorganisation and the Placing, assuming no outstanding options, warrants or other convertible securities are exercised prior to such time.

The Placing Shares will be issued credited as fully paid and will rank pari passu with the other New Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid on or in respect of such shares after their date of issue, being the date of Admission.

Under the terms of the Placing Agreement, the Company will: (i) pay to Brandon Hill certain commissions relating to the placing of the Placing Shares conditional upon Admission becoming effective; and (ii) give customary warranties, undertakings and indemnities to Brandon Hill in each case in respect of the services provided by Brandon Hill in connection with the Placing. The Placing Agreement may be terminated by Brandon Hill at its discretion at any time prior to Admission in certain circumstances, including amongst others, in circumstances where any warranties are found to be untrue, inaccurate or misleading in any material respect or any material adverse event occurs.

The Placing is not being underwritten by Brandon Hill or any other person.

Rule 9 Waiver

Tosca has a holding of 558,580,412 Existing Ordinary Shares, representing 22.0 per cent. of the total issued Existing Ordinary Shares.  Under the Irish Takeover Rules, certain persons are presumed as a matter of law to be acting in concert with Tosca, namely its affiliated persons and the Directors of the Company.  Tosca and the persons deemed to be acting in concert with it (together the "Concert Party") currently hold 702,447,593 Existing Ordinary Shares, representing 27.7 per cent. of the total issued Existing Ordinary Shares.  The Panel will be requested to grant a rebuttal of the presumption in the Irish Takeover Rules that the Directors of the Company are deemed to be acting in concert with Tosca. 

Pursuant to the Placing, Tosca is conditionally subscribing for 20,000,000Placing Shares at the Placing Price.  Immediately after Admission, Tosca will hold a maximum of 25,585,804 New Ordinary Shares, representing 41.53 per cent. of the Company's issued share capital following the Share Capital Reorganisation and as enlarged by the Placing, and assuming that no options or other convertible securities are exercised prior to Admission.

As a result, the Concert Party, or any member of the Concert Party as the Takeover Panel may direct, would become obliged under rule 9 of the Irish Takeover Rules to make a general offer for the balance of the New  Ordinary Shares in issue following the Share Capital Reorganisation unless such obligations were waived by the Takeover Panel.  The Takeover Panel will be requested to grant a waiver of any such obligations (the "Rule 9 Waiver") which is expected to be granted subject to the following conditions:

(i)            a resolution will be proposed as an ordinary resolution (the "Rule 9 Waiver Resolution") at the EGM to be convened by the Company pursuant to which the Independent Shareholders will be requested to  approve the increase in the aggregate percentage of the total New Ordinary Shares held by Tosca following the Placing of up to 41.5 per cent.  Only Independent Shareholders may vote on the Rule 9 Waiver Resolution.  If no rebuttal is obtained from the Panel in respect of the presumption that the Directors of the Company are deemed to be acting in concert with Tosca the Rule 9 Waiver Resolution will be proposed in respect of up to 43.9 per cent of the total New Ordinary Shares; and

(ii)           that a Circular is prepared by the Company in accordance with the Irish Takeover Rules and such Circular is approved by the Takeover Panel in that respect only.

The participation of Tosca in the Placing is conditional upon the same conditions as the participation of the other Placees but will also be entirely conditional upon the Company obtaining the Rule 9 Waiver and the passing by Independent Shareholders of the Rule 9 Waiver Resolution.  If the Rule 9 Waiver is not obtained and the Rule 9 Waiver Resolution is not passed by Independent Shareholders then Tosca will have no obligation to fulfil its participation in the Placing and the proceeds of the Placing will be only £13 million.  However, the participation of Placees other than Tosca in the Placing is not conditional upon the granting of the Rule 9 Waiver and/or the passing of the Rule 9 Waiver Resolution and, therefore, the participation of such other Placees in the Placing is not conditional upon Tosca's participation in the Placing completing. 

The Placing is also conditional upon, amongst other things:

(i)            the passing, without amendment, of the Resolutions at the EGM and the Share Capital Reorganisation taking effect;

(ii)           the Placing Agreement having become unconditional in respect of the Placing (save for Admission) and not having been terminated in accordance with its terms prior to Admission;

(iii)         Admission becoming effective on or before 8.00 a.m. on 17 July 2015 or such later date as the Company and Brandon Hill may agree, being no later than 8.00 a.m. on 14 August 2015.

Application will be made to the London Stock Exchange for Admission of the New Ordinary Shares (including the Placing Shares) and it is expected that Admission will become effective and that dealings in the Placing Shares will commence on AIM at 8.00 a.m. on 17 July 2015.

Shareholders should note that the Placing has been concluded as a private placing and there is no offer of Placing Shares to Shareholders or any member of the public.

The Placing is conditional upon, amongst other things, the passing of the Resolutions and, accordingly if the

Resolutions are not passed, the Placing will not complete.

Related Party Transaction

As part of the Placing, Tosca, a substantial shareholder in the Company and a related party (as defined by the AIM Rules), is subscribing for 20,000,000 Placing Shares at the Placing Price. Tosca is subscribing for Placing Shares on the terms and conditions set out above and will not be offered any beneficial arrangement.

Tosca currently holds 558,580,412 Existing Ordinary Shares in the Company, representing 22.0 per cent. of the Company's issued share capital. Immediately after Admission and completion of the Share Capital Reorganisation, and assuming that the Rule 9 Waiver is granted and the Rule 9 Waiver Resolution is passed by Independent Shareholders, Tosca will hold 25,585,804 New Ordinary Shares, representing 41.5 per cent. of the Company's issued share capital following the Share Capital Reorganisation and as enlarged by the Placing, and assuming that no options, warrants or other convertible securities are exercised prior to Admission.

The subscription by Tosca for these New Ordinary Shares constitutes a related party transaction for the purposes of the AIM Rules. The Directors of the Company, having consulted with Westhouse Securities, the Company's nominated adviser, consider the terms of such subscription for shares by Tosca to be fair and reasonable insofar as the shareholders of the Company are concerned.

6. SHARE CAPITAL REORGANISATION

 The Company's share capital now comprises 2,535,589,975 Existing Ordinary Shares each with a nominal value of EUR0.05. The Existing Ordinary Shares have for some time been trading on AIM at a price below their nominal value of EUR0.05 per share. The issue and allotment of new shares by an Irish incorporated company at a price below their nominal value is prohibited by Irish company law and accordingly the ability of the Company to raise funds by way of the issue of further equity has been restricted.

In addition, as a consequence of having a very large number of Existing Ordinary Shares, with a very low share price, small movements in the share price can result in large percentage movements and therefore considerable volatility. The Share Capital Reorganisation will reduce the number of shares in issue and result in a commensurately higher share price that will be at a level that the Directors believe is more appropriate for a company of the Company's size and should be more attractive to a greater number of potential investors.

In anticipation of the Share Capital Reorganisation Resolutions being passed by Shareholders, the Company will, immediately prior to the EGM, issue such number of Existing Ordinary Shares of EUR0.05 each (not exceeding 99) as will result in the total number of shares of the Company in issue being exactly divisible by 100. Assuming no further Existing Ordinary Shares are issued between the date of this notice and the Record Time, the Company's issued share capital will consist of 61,605,900 New Ordinary Shares after the Share Capital Reorganisation and completion of the Placing.

Impact of the Share Capital Reorganisation

It is proposed that the Share Capital Reorganisation will consist of the following steps:

(a)   each Existing Ordinary Share in issue will be sub-divided into one Intermediate Ordinary Share of EUR0.0001 each and 499 Deferred Shares of EUR0.0001 each;

(b)   every one hundred Intermediate Ordinary Shares in issue will then be consolidated into one New Ordinary Share of EUR0.01 each;

(c)   each authorised but un-issued Existing Ordinary Share will be sub-divided into five (5) New Ordinary Shares;

(d)   no shareholder may hold a fraction of a share and accordingly fractional entitlements arising out of the consolidation under sub-paragraph (b) above will be aggregated into New Ordinary Shares and will be sold in the market after the Share Capital Reorganisation has become effective; and

(e)   amendment of the Company's Articles to set out the rights and restrictions attaching to the Deferred Shares.

Following the Share Capital Reorganisation, although each holder of New Ordinary Shares will hold fewer New Ordinary Shares than their holding of Existing Ordinary Shares prior to the Share Capital Reorganisation, each Shareholder's proportionate interest in the ordinary share capital of the Company will, save for minor adjustments as a result of the fractional entitlement provisions set out below, and save for the dilution attributable to the Placing, remain unchanged. It is only the number of ordinary shares in issue and the nominal value of such ordinary shares which will have changed as a result of the Share Capital Reorganisation and, other than this, each New Ordinary Share will carry the same rights and entitlements as set out in the Company's Articles of Association that currently attach to the Existing Ordinary Shares. The New Ordinary Shares will rank equally with one another. As further detailed below, the Deferred Shares will have no valuable economic rights.

Additionally, the Share Capital Reorganisation will not have any impact on the Company's net assets as no change in the total aggregate nominal value of the Company's issued share capital will occur. Following the Share Capital Reorganisation, and assuming no further shares in the Company are issued after the date of this announcement (save for those Existing Ordinary Shares that the Company intends to issue so as to ensure that the total number of Existing Ordinary Shares in issue is exactly divisible by 100), the Company's issued share capital will consist of 61,605,900 New Ordinary Shares and 1,265,259,397,525 Deferred Shares.

Application will be made to AIM for the New Ordinary Shares to be admitted to trading. The last day of trading on AIM for the Existing Ordinary Shares is expected to be 16 July 2015, with trading in the New

Ordinary Shares expected to commence at 8.00 a.m. on 17 July 2015.

Following the Share Capital Reorganisation, the Company's new ISIN Code will be IE00BWVFTP56 and its new SEDOL Code will be BWVFTP5.

The Deferred Shares will have no voting or dividend rights and, on a return of capital on a winding up, will have no valuable economic rights. No share certificates will be issued in respect of the Deferred Shares, nor will stock accounts in CREST be credited with any entitlement to Deferred Shares, nor will they be admitted to trading on AIM or any other investment exchange.

Warrants

There are currently 57,064,656 warrants outstanding in relation to the share capital of the Company. The range of exercise prices of outstanding warrants is £0.11 to £0.125 and the warrants expire between 31 December 2015 and 31 December 2016. As at 29 May 2015, being the latest practicable date prior to this announcement, if exercised these warrants would be equivalent to a total of 2.25 percent. of the Company's issued ordinary share capital.

The Share Capital Reorganisation constitutes an adjustment event under the warrant terms and therefore the number of warrants and their exercise price will be adjusted pursuant to those adjustment terms. Warrant holders will shortly receive a letter outlining the proposed amendments to the warrants.

Share Options

There are currently 134,738,503 share options outstanding in relation to the share capital of the Company.  The range of exercise prices of outstanding options is from £0.04 to £0.62. As at 29 May 2015, being the latest practicable date prior to this announcement these share options are equivalent to a total of 5.31 per cent. of the Company's issued ordinary share capital.

The Share Capital Reorganisation constitutes an adjustment event under the terms of the Share Schemes and therefore the number of options and the option price will be adjusted pursuant to the terms of the Share Schemes. Option holders will shortly receive a letter outlining the proposed amendments to the share options.

Fractional Entitlements

Unless a holding of Existing Ordinary Shares at the Record Time is exactly divisible by 100, the Share Capital Reorganisation would result in a fractional entitlement to a New Ordinary Share. Shareholders cannot hold fractional entitlements to New Ordinary Shares and so such fractional entitlements will be aggregated by the Directors and sold in the market. The net proceeds of any such sale (after the deduction of the expenses of the sale) will be distributed pro rata to the relevant Shareholders, provided always that no payment will be made to any Shareholder who is entitled to receive a payment of EUR2.54 or less. In accordance with article 45 of the Articles of the Company, amounts of EUR2.54 or less that would otherwise be payable to Shareholders will be retained for the benefit of the Company. Entitlement to New Ordinary Shares will be rounded down to the nearest whole number. This means that any Shareholder who holds fewer than 100 Existing Ordinary Shares immediately prior to the Share Capital Reorganisation will not hold any New Ordinary Shares on Admission.

Where a person is entitled to a payment in respect of fractional entitlements (i.e. that person is entitled to receive an amount in excess of EUR2.54), such payment is expected to be despatched soon thereafter by CREST payment or by cheque. CREST Shareholders will receive the relevant fractional entitlement payment via their CREST accounts. Non-CREST Shareholders, regardless of whether they have an existing mandate to a bank or building society account, will receive a cheque in respect of the relevant fractional entitlement payment.

Deferred Shares and amendments to the Articles of Association

As a result of the creation of the Deferred Shares at the EGM the Company will propose a Resolution to effect an amendment to the Articles to set out the rights and restrictions attaching to the Deferred Shares. Copies of the proposed Memorandum and Articles will be available for inspection.

The Deferred Shares which will be created on the Share Capital Reorganisation becoming effective will have no voting or dividend rights, will not carry any entitlement to attend general meetings of the Company and, on a return of capital on a winding up, will have no valuable economic rights. The Deferred Shares will only be entitled to a payment on a return of capital or winding up of the Company (but not otherwise) after payment of the amounts entitled to be paid to holders of the New Ordinary Shares and the further payment of EUR10,000,000 on each such New Ordinary Share. Additionally, the Deferred Shares are not transferable without the prior written consent of the Company. As such, the Deferred Shares will be effectively valueless as they will carry very limited rights. The Deferred Shares will not be admitted to trading on AIM, no share certificates will be issued in respect of the Deferred Shares and they may not be held in CREST.

7. EXTRAORDINARY GENERAL MEETING

The EGM of the Company at which the Resolutions will be proposed will be convened as soon as practicable and it is the Company's intention that the EGM will be held no later than 17 July 2015. The precise date of the EGM will depend upon when, and if, the Takeover Panel grants the Rule 9 Waiver and approves the Circular, and an announcement confirming the date, time and location of the EGM will be made by the Company when the Circular is posted.

At the EGM, authority will be sought from Shareholders to carry out the Share Capital Reorganisation and facilitate the issue of the Placing Shares pursuant to the Placing.  If passed at the EGM, the Resolutions will:

(i)            implement the Share Capital Reorganisation;

(ii)           confer upon the Directors the authority to issue (A) the New Ordinary Shares pursuant to the Placing and (B) relevant securities including New Ordinary Shares of an amount up to 33.33 per cent. of the issued ordinary share capital of the Company as increased by the issue of the Placing Shares;

(iii)         empower the Directors to dis-apply statutory pre-emption rights in respect of (A) the issue of the Placing Shares and (B) the issue of equity securities of an amount up to ten per cent. of the issued share capital of the Company as enlarged by the Placing Shares;

(iv)          amend the Memorandum and Articles of Association in order to take account of the Companies Act, 2014 (which is scheduled to come into effect on 1 June 2015), align the Company's Articles with those of comparable companies and set out the rights of the Deferred Shares; and

(v)           provided that the Rule 9 Waiver has been granted by the Takeover Panel, approve the Rule 9 Waiver.

The Placing in respect of the Placees other than Tosca is conditional upon, amongst other things, the passing of Resolutions (i) to (iv) above.  The Placing in respect of Tosca is conditional upon, amongst other things, the passing of Resolutions (i) to (v) above. 

All Shareholders on the register at the requisite time will be eligible to vote on all the Resolutions, with the exception of the Rule 9 Waiver Resolution. Only Independent Shareholders will be eligible to vote on the Rule 9 Waiver Resolution which, pursuant to the Rule 9 Waiver conditions expected to be imposed by the Panel, would be conducted by way of a poll. All Independent Shareholders on the register at the requisite time will be eligible to vote on the Rule 9 Waiver Resolution. The full text of the Resolutions will be set out in the Circular.

If the Waiver is not granted by the Takeover Panel within a reasonable period of time then the Company may proceed with convening the EGM for the purposes of proposing the necessary Resolutions to approve the Placing without the participation of Tosca.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Announcement of the Placing and Share Capital Reorganisation	1 June 2015
Posting of the Circular	22 June 2015
Latest time and date for receipt of Forms of Proxy	11.00 a.m. on 14 July 2015
Extraordinary General Meeting	11.00 a.m. on 16 July 2015
Last day of dealings on AIM in the Existing Ordinary Shares	16 July 2015
Record date and time for the Share Capital Reorganisation	6.00 p.m. on 16 July 2015
Admission and commencement of dealings in the New Ordinary Shares and the Placing Shares on AIM	8.00 a.m. on 17 July 2015
CREST Accounts credited with New Ordinary Shares	17 July 2015
Despatch of new share certificates in respect of New Ordinary Shares to certificated Shareholders	by 24 July 2015

Notes:

(i) Each of the times and dates shown above and elsewhere in this document are subject to change. In particular, the date of posting of the Circular, the date of the EGM and therefore the date of Admission and other key dates outlined above are dependent on when, and if, the Takeover Panel grants the Rule 9 Waiver. When the Circular is posted the Company will make an announcement confirming the timetable.

(ii) References to time in this document are to London time unless otherwise stated.

(iii) If any of the above times and/or dates change, the revised time(s) and/or date(s) will be notified to Shareholders by announcement through a Regulatory Information Service.

SHARE CAPITAL REORGANISATION AND PLACING STATISTICS

Number of Existing Ordinary Shares	2,535,589,975
Number of New Ordinary Shares (excluding the Placing Shares) following completion of the Share Capital Reorganisation 2 3	25,355,900
Number of Placing Shares being placed on behalf of the Company	36,250,000
Placing Price per Placing Share 4	80 pence
Number of New Ordinary Shares in issue immediately following completion of the Placing, including the Placing Shares 2 3	61,605,900
Number of New Ordinary Shares being placed as a percentage of the enlarged  issued share capital of the Company immediately following completion of the Placing 2 3	58.8 per cent.
Gross proceeds of the Placing	£29 million
ISIN for Existing Ordinary Shares	IE00B3CLK236
ISIN for New Ordinary Shares	IE00BWVFTP56
SEDOL for New Ordinary Shares	BWVFTP5

² Assumes that no Existing Ordinary Shares are issued following the date of this Announcement and prior to the completion of the

Share Capital Reorganisation and the Placing and excluding the Deferred Shares which are non-voting, and assumes Tosca's full participation in the Placing.

³ Assumes no fractional entitlements arising from Share Capital Reorganisation

⁴ Equivalent to 0.8p per Existing Ordinary Share

DEFINITIONS

The following definitions apply throughout this document, unless the context otherwise requires:

"€" or " EUR"	Euro, the lawful currency of Ireland.
"£"	Pounds Sterling, the lawful currency of the United Kingdom.
"2013 Annual Report"	the annual report and accounts of the Company for the financial year ended 31 December 2013.
"2014 Act"	the Companies Act, 2014 of Ireland.
"Admission"	admission of the New Ordinary Shares, including the Placing Shares, to trading on AIM becoming effective in accordance with Rule 6 of the AIM Rules.
"AIM"	the market of that name operated by the London Stock Exchange.
"AIM Rules"	the rules for AIM Companies issued by the London Stock Exchange, from time to time.
"Announcement"	this announcement.
" Articles"	the articles of association of the Company.
"Articles Amendment"	the amendments proposed to the Company's Articles.
"Barryroe NPI"	the 4.5 per cent. net profit interest granted by Providence Resources plc pursuant to the agreement dated 22 December 2011 entered into between Providence Resources plc and Island Expro Limited.
"Board" or "Directors"	the directors of the Company.
"Brandon Hill"	Brandon Hill Capital Limited, the Company's sole bookrunner for the Placing and joint broker.
"Business Day"	a day on which dealings take place on the London Stock Exchange.
"Circular"	the document to be sent to Shareholders shortly to approve the Placing and convene the EGM at which the Share Capital Reorganisation will be implemented
"Company"	San Leon Energy plc, a company incorporated in Ireland with limited liability under the Companies Acts, 1963 to 1990, with registration number 237825 and whose registered office is at First Floor, Wilton Park House, Wilton Place, Dublin 2, Ireland.
"Consolidation"	the share capital consolidation to be proposed pursuant to and as part of the Share Capital Reorganisation Resolutions whereby, if such Share Capital Reorganisation Resolution is approved by the Shareholders, every one hundred Intermediate Ordinary Shares will be consolidated into one New Ordinary Share.
"CREST"	the computer based system and procedures which enable title to securities to be evidenced and transferred without a written instrument, administered by Euroclear.
"Deferred Shares"	the deferred shares of EUR0.0001 each in the capital of the Company following the Sub-Division.
"EGM" or "Extraordinary General Meeting"	the extraordinary general meeting of the Company to be held at the Herbert Park Hotel, Ballsbridge, Dublin 4, Ireland at 11.00 a.m. on or about 16  July 2015.
"Euroclear"	Euroclear UK & Ireland Limited, the operator of CREST.
"Existing Ordinary Shares"	the ordinary shares of EUR0.05 in issue as at the date of this document and any such ordinary shares issued prior to the Record Time.
"FCA"	the Financial Conduct Authority of the United Kingdom.
"Form of Proxy"	the form of proxy for use at the EGM which is enclosed with this document.
"FSMA"	the Financial Services and Markets Act 2000 (as amended) of the United Kingdom.
"Group"	the Company and its subsidiaries and/or subsidiary undertakings.
"Independent Shareholder(s)"	all Shareholders, excluding, for the purpose of the vote on the Rule 9 Waiver Resolution, Tosca, any party acting in concert with Tosca  and the Directors if so decided by the Takeover Panel.
"Intermediate Ordinary Shares"	the ordinary shares of EUR0.0001 each following the Sub-Division.
"Ireland"	the island of Ireland excluding Northern Ireland.
"London Stock Exchange"	London Stock Exchange plc.
"Memorandum and Articles of Association"	the memorandum and articles of association of the Company.
"Memorandum of Association"	the memorandum of association of the Company.
"New Memorandum and Articles"	the memorandum of association and articles of association of the Company to be adopted at the EGM.
"New Ordinary Shares"	ordinary shares of EUR0.01 each in the share capital of the Company following completion of the Share Capital Reorganisation.
"NPV10"	net present value at 10 per cent. discount rate.
"Official List"	the official list maintained by the United Kingdom Listing Authority.
"Placee"	the persons being issued Placing Shares under the Placing, in accordance with the Placing Agreement.
"Placing"	the placing of the Placing Shares by Brandon Hill as agent for the Company on the terms and subject to the  conditions set out in the Placing Agreement.
"Placing Agreement"	the placing agreement entered into between the Company and Brandon Hill dated 1 June 2015 setting out the terms of the Placing.
"Placing Price"	80p per Placing Share.
"Placing Shares"	36,250,000 New Ordinary Shares to be issued pursuant to the Placing.
"Record Time"	6.00 p.m. on the date of the EGM (including any adjournment thereof) being the time by reference to which the Consolidation and Sub-Division is calculated.
"Regulatory Information Service"	one of the regulatory information services authorised by the United or "RIS " Kingdom Listing Authority to receive, process and disseminate regulatory information in respect of listed companies.
"Resolutions"	the ordinary resolutions and special resolutions to be proposed at the EGM.
"Rule 9 Waiver"	the waiver which may be granted by the Irish Takeover Panel of the obligations arising pursuant to rule 9 of the Irish Takeover Rules to make a general offer for the balance of the New Ordinary Shares in issue following the Share Capital Reorganisation
"Rule 9 Waiver Resolution"	the resolution to be proposed as an ordinary resolution at the EGM to be convened by the Company pursuant to which the Independent Shareholders will be requested to approve the increase in the aggregate percentage of the total New Ordinary Shares held by Tosca following the Placing.
"Share Capital Reorganisation"	the share capital reorganisation to be proposed pursuant to the Share Capital Reorganisation Resolutions, including the Sub-Division, Consolidation and Articles Amendment.
"Share Capital Reorganisation Resolutions "	the resolutions to be proposed at the EGM in connection with the Sub-Division, Consolidation and Articles Amendment as set out in the notice of EGM.
"Share Schemes"	the share option plan and the share based payment scheme of the Company.
"Shareholder"	a holder of Existing Ordinary Shares or, following the Share Capital Reorganisation, New Ordinary Shares.
"Sub-Division"	the share capital sub-division to be proposed pursuant to and as part of the Share Capital Reorganisation Resolutions whereby, if such Resolutions are approved by shareholders, (i) every Existing Ordinary Share in issue will be sub-divided into one Intermediate Ordinary Share and four hundred and ninety nine Deferred Shares and (ii) every un-issued Existing Ordinary Share shall be sub-divided into five New Ordinary Shares.
"Takeover Panel" or "Panel"	the Irish Takeover Panel, established pursuant to the Irish Takeover Panel 1997 as amended.
"Takeover Rules" or "Irish Takeover Rules"	the Irish Takeover Panel Act 1997, Takeover Rules 2013.
"United Kingdom"	United Kingdom of Great Britain and Northern Ireland.
"United Kingdom Listing Authority"	the FCA, acting in its capacity as the competent authority for the purposes of Part VI of the FSMA.
"US" or "United States"	the United States of America, its territories and possessions, any state of the United States of America, the District of Columbia and all other areas subject to the jurisdiction of the United States of America.
"US$"	United States Dollars, the lawful currency of the US.
"Westhouse Securities"	Westhouse Securities Limited, the Company's Nominated Adviser.

Notes:

(i) Unless otherwise stated in this document, all references to statutes or other forms of legislation shall refer to statutes or

legislation of Ireland. Any reference to any provision of any legislation shall include any amendment, modification, re-enactment

or extension thereof.

(ii) Words importing the singular shall include the plural and vice versa and words importing the masculine gender shall include the

feminine or neuter gender.

Westhouse Securities Ltd ("Westhouse Securities"), which is authorised and regulated in the United Kingdom by the FCA, is the Company's nominated adviser.  Westhouse Securities' responsibilities as the Company's nominated adviser under the AIM Rules are owed solely to the London Stock Exchange and are not owed to the Company or to any Director or to any other person. Westhouse Securities is acting exclusively for the Company and no one else in connection with Admission and will not regard any other person as a client in relation to Admission and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Westhouse Securities or for providing advice in relation to Admission or any matters referred to in this announcement.

Brandon Hill Capital Limited ("Brandon Hill"), which is authorised and regulated in the United Kingdom by the FCA, is the Company's bookrunner to the Placing and joint broker and is acting exclusively for the Company and no one else in connection with the Placing and will not regard any other person (whether or not a recipient of this document) as a client in relation to the Placing and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Brandon Hill or for providing advice in relation to the Placing or any matters referred to in this announcement.

 

END

 

 

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