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Global Energy Dev. (NAUT)

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Monday 16 January, 2017

Global Energy Dev.

Proposed Reverse Takeover & Notice of GM

RNS Number : 1907U
Global Energy Development PLC
16 January 2017
 

 

Immediate Release                                                                                    16 January 2017

 

 

GLOBAL ENERGY DEVELOPMENT PLC

(the "Company" or "Global")

 

PROPOSED REVERSE TAKEOVER

 

PROPOSALS TO ACQUIRE SUBSEA SERVICE VESSEL OWNING COMPANIES

AND TO CHANGE NAME TO NAUTILUS MARINE SERVICES PLC

APPOINTMENT OF EXPERIENCED OFFSHORE ENERGY SERVICES OPERATIONS DIRECTOR

 

Global Energy Development PLC (AIM: GED), is pleased to announce that it has today conditionally agreed to purchase 11 offshore subsea service vessels and a barge vessel as it seeks to adopt a new business strategy focusing on the subsea oilfield services sector.

 

Highlights

 

General

 

·     Global has entered into two share purchase agreements to acquire a total of 11 offshore service vessels, a barge vessel and other related equipment through the purchase of 100 per cent of the issued shares in vessel-owning companies

 

·     All vessels are currently located in Louisiana USA with direct access to the offshore oil and gas fields in the Gulf of Mexico

 

·     The acquisitions will mark a fundamental change in Global's business strategy as these transactions are the Company's first step into the global subsea industry.  The Company seeks to make counter-cyclical investments within the global subsea industry that will enable it to capitalise on future recoveries in the oil price and related increased requirements for offshore support services

 

·     Vessels will be able to operate in depths of up to 300 feet and, in the case of one vessel up to 5,000 feet, opening a large addressable market for the Company

 

·     Global to issue Convertible A Loan Notes for near-term cash injection of $10.5m resulting in a strengthened balance sheet with which to further pursue the new business strategy

 

·     Convertible A Loan Notes of $10.5m when fully issued have a 50p conversion price, coupon of 8 per cent. and a maturity date of 1 January 2027

 

·     Proposal to change name to Nautilus Marine Services PLC to reflect new business strategy

 

·     Transactions represent a reverse takeover that will be subject to a vote of Global's shareholders

 

 

 

Transaction "A"

 

·     Conditional agreement to acquire three vessels from Everest Hill Group Inc. through the purchase of all of the issued shares in three vessel-owning companies;

 

·     Consideration for these vessels shall comprise of $8 million upfront which shall be satisfied through the forgiveness of $8 million of the principal amount of the existing $12 million secured loan note agreement ("Loan Note");

 

·     Amendment of the terms of the Loan Note to provide for a reduced interest charge from 12 per cent. to 8 per cent. per annum, payable semi-annually in arrears, and an extended maturity date of 15 September 2018;

 

·     Contingent additional consideration equal to the lower of $5.0 million or 75 per cent of the net cash flows (defined as turnover less direct and allocated operational, general and administrative costs, taxes, insurance and capital expenditures) attributable to these vessels for the period of eighteen full calendar months following the completion date to be satisfied as follows:

 

To be applied in repaying all or part of the then outstanding principal amount of the amended Loan Note; and

 

Any remaining balance (if any) to be settled in cash (or as otherwise agreed);

 

·     The vessels and shares of the vessel-owning companies are to be delivered free from all liens, encumbrances, charters, mortgages and maritime liens. These vessel-owning companies hold no other assets other than the three vessels and they hold no liabilities.

 

Transaction "B"

 

·     Conditional agreement to receive $10.5 million in new cash proceeds (for the issue of Convertible A Loan Notes) and to acquire eight vessels, a barge vessel and other equipment through the purchase of all of the issued shares in two vessel-owning companies from McLarty Capital Partners, Caleura Limited and Mr. Alan Quasha;

 

·     Consideration for the companies to be satisfied by the issuance of Convertible B Loan Notes and Convertible C Loan Notes;

 

·     Convertible A Loan Notes of $10.5 million when fully issued have a 50p conversion price, coupon of 8 per cent. and a maturity date of 1 January 2027;

 

·     Convertible B Loan Notes of $6.1m when fully issued have a 160p conversion price, coupon of 6 per cent. and a maturity date of 1 January 2029;

 

·     Convertible C Loan Notes of $15.0m when fully issued have a 225p conversion price, coupon of 6 per cent. and a maturity date of 1 January 2032.

 

·     The vessels and shares of the vessel-owning companies are to be delivered free from all liens, encumbrances, charters, mortgages and maritime liens.  These vessel-owning companies hold no other assets other than the vessels and equipment and they hold no liabilities.

 

 

Director of Operations

 

Global also announces the appointment of John Payne as Director of Operations.  John, a qualified Master Mariner with over 25 years' experience in the subsea sector, has managed global marine businesses in the offshore energy, renewables and subsea telecoms sectors. During his international career he has held senior positions in service delivery, operations and business development and brings this combined capability to his new role with Global. Recently John held positions as Chief Operating Officer at Aubin Ltd., an Aberdeen based global specialist chemical provider to the Oil and Gas sector and as interim Chief Executive Officer at Hallin Marine, a global subsea services provider based in South East Asia.

 

 

Mikel Faulkner, Chairman of the Company, commented:

 

"We are very pleased to have committed to these acquisitions of the offshore service vessels in the Gulf of Mexico. This represents the Company's first step towards delivering on the Company's new strategy of increasing shareholder value by targeting investment and acquisition opportunities in the subsea services sector with the potential for significant upside.

 

We are also delighted to welcome someone of John's experience to the Global management team. He is a good strategic fit for the business and his knowledge and experience will be of immense benefit as we embark on this new business strategy, especially considering his long and successful track record in the off-shore energy marine sector."

 

 

The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014.

 

Enquiries:

 

Global Energy Development PLC

Anna Williams, Director of Strategy and Business Development

  +1 817 424 2424, ext 110

[email protected]

www.globalenergyplc.com

 

 

 

finnCap Ltd

Christopher Raggett/Scott Mathieson/Kate Bannatyne (Corporate Finance)

0207 220 0500

Emily Morris (Corporate Broking)

 

 

 

Abchurch

Tim Thompson/Rebecca Clube

0207 398 7700

[email protected] 

 

 

 

Reverse Takeover, General Meeting and Admission

Each of the Transactions constitutes a reverse takeover pursuant to Rule 14 of the AIM Rules and accordingly they require Shareholder approval, which is also required for the issue of the Convertible Loan Notes. Implementation of the Proposals is conditional, inter alia, upon the passing of the Resolution at a General Meeting to be held at the registered office of the Company at 3 More London Riverside, London, SE1 2AQ at 9.00 a.m. on Wednesday, 8 February 2017. Although the Transactions are subject to approval by way of a single Resolution, they are subject to some different conditions and they are not inter-conditional. It is possible that they could complete at different times or that one completes and the other does not. It is however currently anticipated that prior to the General Meeting, the only conditions for completion of both Transactions will be passing of the Resolution and Admission. It is therefore anticipated that the Transactions will both complete on 9 February 2017.

Admission Document

 

The following text has been extracted from the Admission Document which has been published today. Capitalised terms shall have the same meaning as in the Admission Document unless the context requires otherwise.

 

ADMISSION STATISTICS

Issued Share Capital

36,112,187

Number of Ordinary Shares on Admission

36,112,187

ISIN on Admission

GB0031461949

SEDOL on Admission

3146194

Existing TIDM

GED

TIDM on Admission

NAUT  

Maximum number of new Ordinary Shares which could be issued on full conversion of the Convertible Loan Notes*

32,970,628

 

* The maximum number of new Ordinary Shares which could be issued on full conversion of the Convertible Loan Notes has for this purpose been calculated assuming conversion at the Applicable Conversion Prices for each class on the respective maturity dates with accrued interest in respect of Convertible B Loan Notes and Convertible C Loan Notes being satisfied by the issue of Ordinary Shares and with no adjustment to the conversion terms.

 

 

EXPECTED TIMETABLE OF PRINCIPAL EVENTS**

 

Date of publication of the Admission Document

2017

16 January

Latest time and date for receipt of CREST voting instructions

9.00 a.m. on 6 February

Latest time and date for receipt of Forms of Proxy

9.00 a.m. on 6 February

General Meeting

8 February 2017

Admission and re-commencement of dealings in the Ordinary Shares

8.00 a.m. on 9 February

 

** Each of these times and dates above is subject to change and the timing for completion of the transactions is dependent on the timing for the conditions being satisfied. Any such change will be notified by an announcement on a Regulatory Information Service. All references to time in this table are to Greenwich Mean Time (GMT).

 

INTRODUCTION

 

The Company has today announced that it has conditionally agreed to purchase three offshore subsea service vessels through the acquisition of vessel-owning companies from Everest (''Transaction A''). The Company has also announced that it has conditionally agreed to purchase a barge vessel through the acquisition of Everest Vessel Holdings from Alan Quasha and to purchase eight offshore subsea service vessels and subsea equipment through the acquisition of a vessel-owning company, Maritime Finance, owned by McLarty Capital Partners and Caleura Limited (''Transaction B''). Following completion of either Transaction A or Transaction B the Company's principal activity will be the operation of subsea service vessels and the provision of subsea oil services.

 

Transaction A

 

Global has conditionally agreed to acquire three offshore subsea service vessels through the acquisition of shares of vessel-owning companies from Everest in exchange for: (i) forgiveness of $8 million of the outstanding principal amount of the Everest Loan Note; (ii) the amendment of the terms of the Everest Loan Note to reduce the interest rate from 12 per cent. to 8 per cent. and to extend the maturity date from 15 January 2017 to 15 September 2018 (the Company has granted forebearance in respect of any payment default in the interim); and (iii) contingent additional consideration equal to the lower of $5 million and 75 per cent. of the net cash inflows attributable to the Transaction A Vessels for the period of eighteen months following completion of their acquisition by the Company. Part of the existing collateral under the Everest Loan Note, comprising Everest's and its affiliates' shareholdings in HKN, which is a substantial shareholder in the Company, will remain in place. Further information on the Transaction A Agreement is set out in paragraph 11 of Part V of the Admission Document.

 

At the time the Everest Loan Note was entered into, Global was a co-lender to Everest alongside HKN whereby Global initially lent $8 million and HKN lent $2 million. As announced on 1 March 2016, Global loaned an additional $2 million to Everest. As announced on 31 October 2016, Global purchased the $2 million principal amount held by HKN at that date at its face value resulting in Global being the sole holder of the Everest Loan Note since that date. Further information on the Everest Loan Note is set out in paragraph 12 of Part V of the Admission Document.

 

Transaction B

 

Global has conditionally agreed to acquire eight offshore subsea service vessels (the ''Transaction B Vessels''), certain equipment and a barge vessel (the ''Rider Barge'') through the transfer of shares of vessel-owning companies in exchange for Global issuing Convertible B Loan Notes and Convertible C Loan Notes. In addition, and as part of Transaction B, MCP, Caleura and Everest have conditionally undertaken to subscribe in cash at their nominal amount for, in aggregate, $10.5 million of Convertible A Loan Notes to be issued by the Company. Further details of Transaction B and the Convertible Loan Notes are set out below in paragraph 4.

 

Change of Name

 

The Directors are proposing that the Company's name be changed to ''Nautilus Marine Services PLC'' to reflect the proposed change in the Company's principal business. This will be implemented by the passing of the Resolution.

 

Conditionality and Admission

 

Each of the Transactions constitutes a reverse takeover pursuant to Rule 14 of the AIM Rules and accordingly they require Shareholder approval, which is also required for the issue of the Convertible Loan Notes. Implementation of the Proposals is conditional, inter alia, upon the passing of the Resolution at the General Meeting to be held at the registered office of the Company at 3 More London Riverside, London SE1 2AQ at 9.00 a.m. on Wednesday, 8 February 2017. Although the Transactions are subject to approval by way of a single Resolution, they are subject to some different conditions and they are not inter-conditional. It is possible that they could complete at different times or that one completes and the other does not. It is however currently anticipated that by the time of the General Meeting, the only outstanding conditions for completion of both Transactions will be the passing of the Resolution and Admission. It is therefore anticipated that the Transactions will both complete on 9 February 2017 and that Admission will become effective and that dealings in the Ordinary Shares on AIM will recommence at 8.00 a.m. on the same day.

 

No new Ordinary Shares are being issued at the time of completion of either Transaction, but new Ordinary Shares would be issued on conversion of any of the Convertible Loan Notes and potentially settlement of accrued interest.

 

The Admission Document contains detailed information about the Transaction A Vessels, the Transaction B Vessels and the terms of Transaction A and Transaction B and explains why the Board consider the Proposals to be in the best interests of the Company and its Shareholders as a whole and recommends that you vote in favour of the Resolution to be proposed at the General Meeting, notice of which is set out at the end of the Admission Document.

 

BACKGROUND INFORMATION ON GLOBAL

 

History and Development of the Group

 

Global has been listed on AIM since March 2002 and since its incorporation has been a producer and seller of hydrocarbons. The Company's portfolio includes exploration and developmental drilling opportunities in Colombia, South America. The Company currently holds two contracts: the Bolivar and Bocachico Association Contracts, both in the Middle Magdalena Valley of Colombia. Global holds a 100 per cent. working interest in the Bolivar and Bocachico Association Contracts held in Colombia and both are subject to royalties payable on production of 20 per cent. Revenue from continuing operations currently relates solely to oil production from the Company's Torcaz #2 well located in the Bocachico Association Contract area.

 

On 5 December 2014 the Company disposed of its major asset, Global's contract areas within the Llanos Basin (the ''Llanos Assets'') in Colombia, for $50 million through the sale of the entire issued share capital of the Company's relevant wholly owned subsidiary. The disposal of the Llanos Assets left Global with only its operations associated with its Bolivar and Bocachico Association Contract areas and allowed the Company to eliminate its outstanding debt. Since the disposal, the Company has remained debt-free and has actively been pursuing energy-based strategic opportunities to realise value for its shareholders.

 

The Group's Current Businesses and Activities

 

As described above, the Company's portfolio comprises a base of exploration and developmental drilling opportunities in its Bolivar and Bocachico Association Contract areas within Colombia, South America.

 

The reserve estimates shown below were developed by a professional engineer licenced in the State of Texas employed by Ralph E. Davis Associates, Inc. (''RED'') (of 711 Louisiana Street, Suite 3100 Houston, Texas 77002), an independent petroleum engineering firm, and are based on the PRMS joint reserve and resource definitions of the Society of Petroleum Engineers, the World Petroleum Council, the American Association of Petroleum Geologists and the Society of Petroleum Evaluation Engineers consistent with UK reporting purposes. Proved and probable reserve estimates are based on a number of underlying assumptions including oil prices, future costs, oil in place and reservoir performance, which are inherently uncertain. RED uses established industry techniques to generate its estimates. However, the amount of reserves that will ultimately be recovered from any field cannot be known with certainty until the end of the field's life.

 

The table below presents the Company's reserve information for its Colombian Association Contracts as at 31 December 2015:

 

Contract Name

Country

Basin

Held with:

Expiry Date

Acreage

Initial Royalty (%)

Proved Reserves (mmbbls)

2P Reserves (mmbbls)

3P Reserves (mmbbls)

(A) Bolivar

Colombia

Middle Magdalena

Empresa Colombiana de Petroleos ("Ecopetrol")

2024

21,000

20

0

0

0

(B) Bocachico

Colombia

Middle Magdalena

Ecopetrol

2022

54,700

20

0

0

0

 

The Company has a strong cash balance, a streamlined overhead structure and no mandatory contract or debt obligations which are significant advantages in the current oil price environment. While preserving Global's acreage in Colombia (but not undertaking any development work) until oil prices recover further, the Company has been actively vetting acquisition prospects in both the petroleum exploration and production sector as well as the oilfield services sector. Global has not limited itself to looking at traditional petroleum exploration and production plays and has expanded its geographical research to cover potential opportunities outside of the current South America focus. During the first half of 2016, Global reorganised personnel and work functions to both streamline its functions as well as strategically position the Company to take advantage of opportunities which become available to it.

 

The Directors believe that the sustained low oil pricing has created enhanced buying opportunities stemming from highly-leveraged companies that are challenged by this current downturn. Global continues to have financial strength with a strong cash position and a debt-free balance sheet and believes that multiple sectors within the energy industry provide excellent ''buy low'', ''hold'' and ''sell high'' scenarios.

 

The Company has identified the Transactions, two opportunities in the Gulf of Mexico, as an initial entry into the global offshore subsea sector to take advantage of distressed market conditions through counter-cyclical investment, consolidation and technology opportunities with, the Directors believe, the potential to realise increased value for Shareholders. Accordingly, following completion of the Transactions, Global's focus will be on the subsea services industry and the Colombian acreage will be of only marginal importance. No cash is payable by the Company at Admission pursuant to the Transactions and the Company will continue to look for additional investment opportunities in the subsea services sector.

 

Summary Financials of Global Energy Development plc

 

6 months ended 30 June 2016

Year ended 31 December 2015

Year ended 31 December 2014

Year ended 31 December 2013

 

$'000

$'000

$'000

$'000

Revenue

84

365

689

33,612

(Loss)/profit before tax from continuing operations

(2,329)

(26,725)

(17,275)

3,411

Total assets

32,706

35,459

65,220

123,319

Net assets

29,703

32,253

55,800

80,890

Cash and cash equivalents

21,012

25,608

41,153

3,415

 

The information in respect of the 6 months ended 30 June 2016 above is extracted from Global's interim accounts ended the same date and is unaudited.

 

TRANSACTION A

 

The Company has identified three offshore subsea service vessels belonging to Everest which are based in the Gulf of Mexico, namely Mystic Viking, Midnight Star and Cal Diver 1. Everest has agreed to sell these vessels (''Transaction A Vessels'') free from encumbrances and liens through the transfer of all of the shares of the vessel-owning companies which hold no other assets or liabilities other than the Transaction A Vessels with full indemnification from Everest. The Transaction A Vessels, are currently in laid up status and can be placed in service in mid to shallow waters following dry docking and improvement works. Global will assess current and future market conditions along with costs of improvement works, expected return on investment and related timing for dry dock improvements to these vessels in order to determine the proper time to put the Transaction A Vessels back into service to operate profitably.

 

Transaction A Vessels

 

Mystic Viking

 

Built in 1983, the Mystic Viking is an offshore supply vessel, fitted with a SIMRAD Dynamic

Positioning System (''DP'') and is currently set up to support Remotely Operated Vehicle (''ROV'') programmes in the Gulf of Mexico. The Mystic Viking is equipped with a 50 ton Hydralift crane, a helideck suitable for a Bell 212 helicopter and has accommodations of up to 57 berths. The vessel is currently flagged in the Bahamas and the port of registry is Nassau, Bahamas.

 

The Mystic Viking is currently held in a newly-created affiliated entity of Everest, NMS Viking Inc. (incorporated and registered in the Marshall Islands) and has been delivered by Everest to a location in Louisiana, USA as designated by Global.

 

Midnight Star

 

Built in 1975 and refurbished in 2011, the Midnight Star is fitted out as a diving support vessel featuring a six-man saturation diving system depth rated up to 300 meters (1,000 feet). The Midnight Star is equipped with a 31 ton EBI crane, has a four-point mooring system for diving operations and has accommodations of up to 42 berths. The vessel is currently flagged in Vanuatu and the port of registry is Port Villa, Vanuatu.

 

The Midnight Star is currently held in a newly-created affiliated entity of Everest, NMS Star Inc. (incorporated and registered in the Marshall Islands) and has been delivered by Everest to a location in Louisiana, USA as designated by Global.

 

Cal Diver 1

 

Built in 1974 and refurbished in 2013, the Cal Diver 1 is a four-point diving support vessel and is currently flagged in the United States and registered in New Orleans, Louisiana, USA. Cal Diver 1 has been in an extended period of cold lay up and would require more extensive work and investment than the Mystic Viking and Midnight Star to return to service.

 

The Cal Diver 1 is currently held in a newly-created affiliated entity of Everest, NMS CD1 Inc. (incorporated and registered in the Marshall Islands) and will be delivered by Everest to a location in Louisiana, USA as designated by Global.

 

Valuation and transaction terms

 

The fair market value of each of the Transaction A Vessels has been appraised by Kennedy Marr, a global maritime firm headquartered in the U.K.

 

The Company, utilising the fair market value appraisals received from Kennedy Marr, has agreed a consideration of $8 million for the Transaction A Vessels which will be satisfied by forgiveness of $8 million of the outstanding principal amount of the Everest Loan Note and modification of its terms (as described below). In addition, there is a future contingent consideration payment to be calculated as the lower of $5 million or 75 per cent. of the net cash inflows (as defined in the Transaction A Agreement) associated with the Transaction A Vessels for the period of eighteen months following completion of Transaction A. Any such contingent consideration will be satisfied with up to $4 million offset against the remaining Everest Loan Note balance with any remaining balance of the contingent consideration to be payable in cash or as the parties may otherwise agree.

 

Everest Loan Note

 

As previously announced, Global holds a loan note with Everest for $12 million which is payable in full on 15 January 2017. The Company has granted forebearance in respect of any non-payment default pending completion or termination of the Transaction A Agreement to allow Transaction A to proceed. If the Transaction A Agreement terminates without Transaction A completing, the Everest Loan Note will be immediately repayable. The Everest Loan Note currently has an interest rate of 12 per cent. and is collateralised by Everest and its affiliates' shareholdings in HKN, which is a substantial shareholder in the Company, and security over the Rider Barge and the Transaction A Vessels.

 

Upon completion of Transaction A, the Company will amend the terms of the Everest Loan Note (of which $4 million of principal will remain outstanding following settlement of the Transaction A consideration). The new terms of the Everest Loan Note will include a reduced interest charge of 8 per cent. per annum, payable quarterly in arrears, an extended maturity date of 15 September 2018 (subject to acceleration) to be implemented by entry into the Everest Loan Note Amendment Deed with the existing collateral over the shares in HKN remaining in place and securing the obligations of Everest to Global.

 

Global's Future Plans for the Transaction A Vessels

 

Following completion of Transaction A, Global will hold the Transaction A Vessels at its Berwick dock facility in Louisiana, USA with access to the Gulf of Mexico (see below). Global will assess current and future market conditions along with any costs, expected return on investment and related timing for dry dock improvements to these vessels in order to determine the most appropriate work to be undertaken on each Transaction A Vessel and the timing to put it back into service to operate profitably.

 

By the time of completion of each of the Transactions, all of the Transaction A Vessels or Transaction B Vessels (as applicable) must have been delivered to the Berwick dock facility.

 

TRANSACTION B

 

The Company identified certain offshore subsea service vessels (the Transaction B Vessels), a barge vessel (the Rider Barge) and certain equipment located in Louisiana, USA which had been used to provide offshore services in the Gulf of Mexico.

 

The Directors believe that Transaction B complements Transaction A as an initial entry into the Gulf of Mexico offshore subsea services sector pursuant to the Company's new global strategy to take advantage of distressed market conditions through counter-cyclical investment, consolidation and technology opportunities with the potential to realise increased value for Shareholders.

 

The Transaction B Assets (comprising the Transaction B Vessels and equipment) will be acquired by the acquisition of the recently-incorporated Maritime Finance from MCP and Caleura after it has acquired the Transaction B Assets from DCM pursuant to foreclosure proceedings which have been initiated as described below.

 

MCP and Caleura have conditionally agreed:

 

(i)   to subscribe at their nominal amount for Convertible A Loan Notes with an aggregate nominal amount of up to $10.0 million in cash; and

(ii)  to transfer to Global all of the issued and outstanding interests in the vessel-owning company (Maritime Finance) (which will prior to completion of Transaction B own the Transaction B Assets free from liens and encumbrances) in consideration for the issue of $4.6 million of Convertible B Loan Notes and $10.4 million of Convertible C Loan Notes proportionate to their ownership of Maritime Finance.

 

The Rider Barge will be acquired by the acquisition of Everest Vessel Holdings.

 

Everest has conditionally agreed to subscribe at their nominal amount for Convertible A Loan Notes with an aggregate nominal amount of $0.5 million in cash.

 

Alan Quasha has conditionally agreed to sell all issued and outstanding interests in Everest Vessel Holdings (which owns the Rider Barge free from encumbrances and liens) to Global in consideration for the issue of $1.5 million of Convertible B Loan Notes and $4.6 million of Convertible C Loan Notes.

 

Further information on the Transaction Agreements is set out in paragraph 11 of Part V of the Admission Document.

 

Acquisition of the Transaction B Assets from DCM - The Foreclosure Process

 

Everest is also the holder of 76.5 per cent. of the issued shares in Deepcor Marine Inc. (''DCM''). MCP and Caleura advanced secured loans to DCM (the ''MCP Loans'') on which interest has accrued. The Transaction B Assets were pledged as part of the security for the MCP Loans.

 

MCP and Caleura assigned part of the MCP Loans and all their rights in respect thereof and the related security to Maritime Finance in consideration for the issue to them, separately, of shares comprising in aggregate 100 per cent. of the issued interests in Maritime Finance. MCP and Caleura have conditionally agreed to sell all of the interests in Maritime Finance to Global as part of Transaction B.

 

Maritime Finance has exercised its rights of foreclosure pursuant to the security in respect of the MCP Loans over the Transaction B Assets. The transfer of the Transaction B Vessels to Maritime Finance is expected to be implemented through a court order confirming the sale and directing the issue of the relevant bills of sale. The transfer of the equipment, subject to Transaction B, is not subject to such judicial proceeding and is intended to be foreclosed upon in accordance with the provisions of applicable law. Following completion of the foreclosure process and transfer of the Transaction B Assets to Maritime Finance it will have full ownership and possession of the these assets free from all encumbrances and liens.

 

Completion of the transfer of the Transaction B Assets to Maritime Finance is a condition to completion of Transaction B and is currently expected to take place on or around 27 January 2017, subject to any potential delays.

 

Provisions applicable to both Transactions

 

In certain circumstances, including if claims are made against any of the vessels which are the subject of the Transactions or their ship-owning companies relating to pre-completion events and are not settled by the sellers, Transaction A and/or Transaction B (as applicable) could be reversed with the Everest Loan Note obligations being reinstated and/or the related B and C Convertible Loan Notes being cancelled.

 

As described in further detail below, some of the Convertible Loan Notes are due to be issued at the time of completion of the Transactions, with the balance to be issued within the following three months.

 

Everest is an affiliated company of the Quasha family trusts, which also have an interest in Lyford, an existing shareholder of the Company. Alan Quasha is a principal beneficiary of the Quasha family trusts. HKN Inc., the Company's principal shareholder, Lyford and its parties acting in concert with it are interested in 22,553,406 Ordinary Shares, representing 62.45 per cent. of the issued share capital of the Company.

 

Transaction B Vessels

 

DC Dancer

 

Built in 1977, the DC Dancer is a four-point diving support vessel that supports surface diving operations. The DC Dancer is equipped with a 30 ton EBI crane and has accommodations of up to 36 berths. The vessel is currently flagged in the United States and the port of registry is in New Orleans, Louisiana.

 

The DC Dancer will be delivered by MCP to the Berwick dock facility in Louisiana, USA as designated by Global.

 

DC Star

 

Built in 1967, the DC Star is a four-point diving support vessel that assists surface diving operations. The DC Star is equipped with a 20 ton HydraPro crane and has accommodations of up to 32 berths. The vessel is currently flagged in the United States and the port of registry is in New Orleans, Louisiana.

 

The DC Star will be delivered by MCP to the Berwick dock facility in Louisiana, USA as designated by Global.

 

DC Fred

 

Built in 1969, the DC Fred is a four-point diving support vessel that assists surface diving operations. The DC Fred is equipped with a 25 ton Coast crane and has accommodations of up to 36 berths. The vessel is currently flagged in the United States and the port of registry is in Morgan City, Louisiana.

 

The DC Fred will be delivered by MCP to the Berwick dock facility in Louisiana, USA as designated by Global.

 

DC IV

 

Built in 2000, the DC IV is a four-point diving support vessel that assists surface diving operations and offshore inspections. The DC IV has accommodations of up to 21 berths. The vessel is currently flagged in the United States and the port of registry is in Morgan City, Louisiana.

 

The DC IV has been delivered by MCP to the Berwick dock facility in Louisiana, USA as designated by Global.

 

DC Polo

 

Built in 1983, the DC Polo is a four-point diving support vessel that assists surface diving operations and offshore inspections. The DC Polo has accommodations of up to 19 berths. The vessel is currently flagged in the United States and the port of registry is in Morgan City, Louisiana.

 

The DC Polo will be delivered by MCP to the Berwick dock facility in Louisiana, USA as designated by Global.

 

DC Triumph, DC Victory, and DC Sterling

 

The DC Triumph, Victory, and Sterling are currently out of service and would require extensive work and investment to return to service. The Company may determine to salvage these vessels.

 

Rider Barge

 

Built in 1995, the Rider Barge is a non-propelled pipelay barge. It features pipe laying equipment and can support air diving operations. The Rider Barge has accommodations of up to 88 berths. The vessel is currently flagged in the United States and the port of registry is in New Orleans, Louisiana and is in laid up status.

 

The Rider Barge will be delivered by Everest Vessel Holdings to the Berwick dock facility in Louisiana, USA as designated by Global.

 

Berwick dock facility

 

Global has signed a one-year lease with Hellenic, L.L.C. for exclusive use of the docking facility in Berwick, Louisiana. Lease of this facility provides 24-hour docking services. The Company has also contracted for on-site 24-hour security for the vessels. The facility also includes office space and adequate area for storage of equipment.

 

The lease is for an initial period of one year at a rate of $10,000 per month and has an option for a further two years at $12,000 per month.

 

Convertible Loan Notes:

 

Three forms of Convertible Loan Notes are due to be issued by the Company pursuant to the Transactions. Set out below is a summary of the principal terms which differ between the different tranches and those which apply to all.

 

Convertible A Loan Note:

 

 

Principal Amount:

$10,500,000

 

Maturity Date:

1 January 2027 (unless converted to Ordinary Shares before then). Payments on maturity are to be settled in cash.

 

Interest:

Non-compounding interest will be payable upon maturity or conversion (calculated on a 360-day calendar year) at 8 per cent.

 

Conversion Price:

The outstanding principal amount will be convertible into Ordinary Shares at 50 pence per share (the ''A Conversion Price''), subject to adjustment in certain circumstances.

 

Convertible B Loan Note:

 

 

Principal Amount:

$6,100,000

 

Maturity Date:

1 January 2029 (unless converted to Ordinary Share before then). Payments on maturity are to be settled in cash or satisfied in whole or in part by the issue of Ordinary Shares at the option of the Company on the basis described under ''Repayment Terms'' below.

 

Interest:

Non-compounding interest will be payable upon maturity or conversion (calculated on a 360-day calendar year) at 6 per cent., payable in cash or satisfied by the issue of Ordinary Shares at the option of the Company.

 

Conversion Price:

The outstanding principal amount will be convertible into Ordinary Shares at 160 pence per share (the ''B Conversion Price''), subject to adjustment in certain circumstances.

 

Convertible C Loan Note:

 

 

Principal Amount:

$15,000,000

 

Maturity Date:

1 January 2032 (unless converted to Ordinary Shares before then). Payments on maturity to be settled in cash or satisfied in whole or in part by the issue of Ordinary Shares at the option of the Company on the basis described under ''Repayment Terms'' below.

 

Interest:

Non-compounding interest will be payable upon maturity or conversion (calculated on a 360-day calendar year) at 6 per cent., payable in cash or satisfied by the issue of Ordinary Shares at the option of the Company.

 

Conversion Price:

The outstanding principal amount will be convertible into Ordinary Shares at 225 pence per share (the ''C Conversion Price'' and; together with the A Conversion Price and B Conversion Price, the ''Applicable Conversion Price''), subject to adjustment in certain circumstances.

 

General Terms of Convertible Loan Notes:

 

Voluntary Conversion Terms:

A holder of Convertible Loan Notes may convert any amount of the outstanding principal amount and (in the case of the Convertible B Loan Notes and Convertible C Loan Notes only) any unpaid and accrued interest of the Convertible Loan Notes into Ordinary Shares at the Applicable Conversion Price at any time following thirty days from the issue of the relevant Convertible Loan Notes with a 20-day notice to the Company.

 

Mandatory Conversion Terms:

The Company may elect to convert the outstanding principal amount of the Convertible Loan Notes (along with any unpaid and accrued interest on those Convertible B and C Loan Notes) into Ordinary Shares, in the event that for any 10 consecutive business days, the average closing price on AIM of the Ordinary Shares equals or exceeds 110 per cent. of the Applicable Conversion Price.

 

Repayment Terms:

Each issue of Convertible Loan Notes may at any time after issue be redeemed at their nominal amount by the Company on 10 days' notice, during which period conversion rights can be exercised by the holders.

 

At maturity any Convertible Loan Notes not previously converted into Ordinary Shares, will be redeemed in cash in the case of the Convertible A Loan Notes, and either (at the option of the Company) in cash and/or through the issue of Ordinary Shares in the case of the Convertible B Loan Notes and Convertible C Loan Notes. Ordinary Shares to be issued at maturity will be issued at a price equal to the greater of (i) the Applicable Conversion Price for that class of Convertible Loan Notes and (ii) 110 per cent. of the average closing price of the Ordinary Shares on AIM for the 10 trading days immediately preceding maturity. If the value of the Ordinary Shares to be issued on repayment of Convertible B Loan Notes and Convertible C Loan Notes on this basis is less than the value of the principal amount being repaid, the applicable conversion price would be reduced to such level as would result in these values being the same provided that the applicable conversion price cannot be less than the nominal value of the Ordinary Shares.

 

Pledge Provision:

The Convertible Loan Notes will be unsecured. Global will undertake not to use the Transaction B Assets (excluding the Rider Barge) as security or collateral in any subsequent transaction or financing.

 

Conversion Price Adjustments:

The Applicable Conversion Price will be subject to standard mechanical adjustments.

 

 

Further information on the Convertible Loan Notes can be found in paragraph 11 of Part V of the Admission Document.

 

Timing for issue of the Convertible Loan Notes:

 

The timings for cash subscriptions for the Convertible A Loan Notes and for the issue of the Convertible B Loan Notes and the Convertible C Loan Notes as consideration pursuant to the Transaction B Agreement are set out below:

 

Date/Time

Everest

Everest Vessel Holdings

MCP

Caleura

Total

As part of Completion

ALN: Nil

BLN: Nil

CLN: Nil

ALN: Nil

BLN: Nil

CLN: Nil

ALN: $2,292,000

BLN: $1,054,320

CLN: $2,383,680

 

ALN: $708,000

BLN: $325,680

CLN: $736,320

 

ALN: $3,000,000

BLN: $1,380,000

CLN: $3,120,000

 

31 March 2017

ALN: Nil

BLN: Nil

CLN: Nil

ALN: Nil

BLN: Nil

CLN: Nil

ALN: $5,348,000

BLN: $2,460,080

CLN: $5,561,920

 

ALN: $1,652,000

BLN: $759,920

CLN: $1,718,080

 

ALN: $7,000,000

BLN: $3,220,000

CLN: $7,280,000

 

15 April 2017

ALN: $500,000

BLN: Nil

CLN: Nil

ALN: Nil

BLN: 1,500,000

CLN: 4,600,000

ALN: Nil

BLN: Nil

CLN: Nil

ALN: Nil

BLN: Nil

CLN: Nil

ALN: $500,000

BLN: $1,500,000

CLN: $4,600,000

 

Total

ALN: $500,000

BLN: Nil

CLN: Nil

ALN: Nil

BLN: $1,500,000

CLN: $4,600,000

ALN: $7,640,000

BLN: $3,514,400

CLN: $7,945,600

 

ALN: $2,360,000

BLN: $1,085,600

CLN: $2,454,400

 

ALN: $10,500,000

BLN: $6,100,000

CLN: $15,000,000

 

Conversion of the Convertible Loan Notes:

 

The maximum number of new Ordinary Shares which could be issued on full conversion of the Convertible Loan Notes, calculated assuming conversion at the Applicable Conversion Price for each class on the respective maturity dates with (in the case of the Convertible B Loan Notes and Convertible C Loan Notes) accrued interest satisfied by the issue of Ordinary Shares and with no adjustment to the conversion terms, is as follows:

 

 

Number of new Ordinary Shares

 

Convertible A Loan Notes

17,213,115

Convertible A Loan Notes

5,375,000

Convertible A Loan Notes

10,382,514

Total

32,970,628

 

 

SUBSEA SERVICES MARKET OPPORTUNITY AND COMPETITIVE ENVIRONMENT

 

Subsea Services

 

According to a market analysis report, it is estimated that the Gulf of Mexico has over 3.34 billion barrels of proven oil reserves in nonproducing reservoirs and that there is approximately $36.4 billion of projected capital expenditure to be spent by the end of 2020 in the Gulf of Mexico as a whole of which $8.4 billion (23 per cent.) is in depths of less than 1,600 metres (Estimated Oil and Gas Reserves, Bureau of Ocean Energy Management, March 2016).

 

Currently, in the Gulf of Mexico, there are over 3,800 production platforms and 33,000 miles of offshore pipelines (Source: Impact of the 2008 Hurricanes on the Natural Gas Industry, Energy Information Administration).

 

Subsea service vessels, similar to those being purchased pursuant to the Transactions, are used to transport divers, technology and equipment to oil fields which require work-overs or remediation. Most servicing is undertaken subsea which requires specialist divers, remote operated vehicles, operators and equipment, all of which are vessel-based. Recent Gulf of Mexico shallow water field transactions, such as the divestiture by Chevron of their shallow water fields, may provide vessel operators with potential new vessel contract tenders and service opportunities over the next few years.

 

According to the report referenced above, the drop in demand for diver support vessels through 2014-2016 suggests a substantial backlog in inspection, repair and maintenance. The report notes that while maintenance intervals are not publicly declared and vary from operator to operator, it is to be expected that demand will pick up post-2017 as work programmes have not historically been, and are unlikely to be, deferred for more than four years.

 

Examples of services provided by subsea service companies are:

 

·     Platform and pipeline inspections - a routine visual inspection of the physical infrastructure by divers or Remote Operated Vehicles (ROVs);

·     Trenching, dredging and burial - the excavation of the subsea surface for the purpose of either burying pipes and cables or deepening the waterway;

·     Accommodation support - the provision of temporary lodgings for offshore rig workers;

·     Search and recovery;

·     Logistics support;

·     Wet (underwater) welding of pipes;

·     Hot tapping - connection of existing piping with the interruption of emptying that section of pipe;

·     Underwater burning - the cutting of subsea pipelines;

·     Installation of risers - pipes that connect an offshore rig to a subsea system;

·     Change out of single-point mooring systems - loading buoys anchored offshore that provide a mooring point;

·     Installation of pipeline end manifolds - the mechanics that connect a subsea pipeline to the end rig;

·     Inspection and repair of remote operated vehicles;

·     Decommissioning support; and

·     General diving operations requiring vessel support.

 

Competitive Environment and Regulation

 

Several local vessel operators within the Gulf of Mexico are geared towards DSV and ROVSV services. Of these local operators, several have been forced to allow their floating assets to deteriorate over a prolonged period due to the financial pressures in the area.

 

The larger competitors within the shallow water Gulf of Mexico include Triton Diving, Aqueous, Bisso Marine, Epic Divers, Chet Morrison and Ranger Subsea. Currently there is considerable competition in the market given the small number of projects open for tendering.

 

The competitive environment and fragmented nature of this sub-sector may lead to consolidation in the event of further sustained recovery in the oil price. The Directors anticipate that, in addition to increased activity from any stronger oil price, increased operational vessel utilisation will be achievable as increased subsea inspection and repair operations become critical for field operation productivity and/or compliance with regulatory requirements.

 

The Jones Act, also known as the Merchant Marine Act of 1920, is US legislation that reserves US coastwise transportation to particular US flag ships that have a ''coastwise endorsement'' on their US Certificate of Documentation. As less than 75 per cent. of Global's issued shares are owned by US persons the Enlarged Group's vessels, even those which are US flagged, owned by US entities and managed by US personnel, will not be eligible to have a ''coastwise endorsement'' on their US Certificate of Documentation. This means that they will be likely not to be eligible to undertake transportation of merchandise and passengers between US ports and places. This may reduce the opportunities for profitable exploitation of the Enlarged Group's vessels.

 

REASONS FOR THE TRANSACTION

 

Although the timing and sustainability of further recovery in the oil price is unknown, the Company believes that further price recovery is, at some level, inevitable. The Directors believe that during the next 18 months there will be an opportune period for the Company to acquire assets or businesses within the energy industry at low prices in order to expand and create a more diversified portfolio of assets and/or companies that can take advantage of such further recovery in the oil price and any increase in subsea service activity.

 

For the reasons described above and below, the Company believes that the Transactions are in the best interest of its Shareholders.

 

Penetration into the asset-backed vessel service industry

 

The Transactions represent Global's first step into the global subsea services industry. The Company believes that the anticipated oil price recovery will bring significant opportunities in the subsea service industry and acquiring the Transaction A Vessels and Transaction B Assets and will provide it with a platform to capitalise on this market.

 

Technology services

 

The Company will be seeking to invest in offshore technology that aims to increase service levels, improve profitability and add value to its subsea service assets.

 

Logistics

 

The Company will also be looking to invest in subsea services logistical businesses or to develop its own expertise in this area. The Directors believe that this expertise, alongside technology and subsea assets, can create a competitive advantage when the oil and subsea industry recovers.

 

RELATED PARTY TRANSACTIONS

 

Everest and Everest Vessel Holdings are affiliated companies of the Quasha family trusts which also have an interest in Lyford, an existing shareholder in Global. Alan Quasha, the proposed seller of Everest Vessel Holdings is a principal beneficiary of the Quasha family trusts. Alan Quasha is a director of HKN, the Company's principal shareholder. In addition, Alan Quasha's brother, Wayne Quasha, controls Everest which itself controls Lyford. HKN, Lyford and the parties acting in concert with it are interested in 22,553,406 Ordinary Shares, representing 62.45 per cent. of the issued share capital of the Company. By virtue of these holdings, the entry into the Transaction Agreements with Everest and Alan Quasha and the amendments to the Everest Loan Note and issuance to Everest and Alan Quasha of Convertible Loan Notes constitute related party transactions in accordance with

AIM Rule 13.

 

The Independent Directors consider, having consulted with finnCap, that the terms of Transaction Agreements, amendments to the Everest Loan Note and issuance to Everest and Alan Quasha of Convertible Loan Notes are fair and reasonable insofar as Shareholders are concerned.

 

CURRENT TRADING AND FUTURE PROSPECTS

 

For the six months to 30 June 2016, Global reported the following financial highlights:

 

·     Strong cash and cash equivalents balance of $21 million;

·     Note receivable balance of $10 million with a 12 per cent. coupon (balance now standing at $12 million);

·     Debt free;

·     Revenue of $84,000 and loss before tax from continuing operations of $2.3 million.

 

These figures are taken from the Group's unaudited interim accounts for the period ending 30 June 2016.

 

Current trading is consistent with the Board's expectations.

 

The Company is incurring non-recurring costs associated with the Transactions and the Admission process.

 

As stated above, the Directors believe that the entry into the subsea services sector represents a good counter-cyclical investment for the Company that will enable it to capitalise on recoveries in the oil price and the related requirement for support services.

 

On completion of the Transactions, the Company will own 11 subsea service vessels, certain equipment and one barge. The Directors believe that these will allow the Group to service the offshore oil and gas platforms that operate in the Gulf of Mexico in depths of less than 300 feet (although the Mystic Viking and Midnight Star are also able to operate in depths of up to 5,000 feet and 700 feet respectively). This sub-sector is currently depressed since the prevailing oil price makes many operations for current oil and gas operators uneconomic. The Directors believe that this has had a knock-on effect on the companies that service this part of the industry as they have been forced to compete for work which has become scarcer. The Directors are firm in their view that the Company will not take on uneconomic work in order to have its vessels in service. Accordingly, it is likely that the vessels will remain inactive for a considerable period until the oil price recovers and exploration and production operations return in the shallow water areas of the Gulf of Mexico. The Company will continue to incur maintenance and docking costs which may not be covered by its earnings while the vessels remain inactive. The Company's strong cash balance will enable it to adopt such an approach for the foreseeable future. Upon a recovery in the market, Global will determine in what order it will put its vessels into service (if at all).

 

However, the Directors believe that an improvement in the oil price is, at some level, inevitable and that, accordingly, oil and gas exploration and production activities will increase in the shallow water areas of the Gulf of Mexico. The Directors believe that the Company will be able to take advantage of such recovery through the exploitation of its vessels and its other assets in an environment in which many competitors will have suffered from the attrition of the prior years.

 

DIVIDEND POLICY

 

The Company has not to date paid any dividends and has no current plans to do so. Under the terms of the Convertible B Loan Notes and the Convertible C Loan Notes while any of such notes remaining outstanding the Company shall not declare or pay any cash or share dividends to be paid to its shareholders for three years following the issuance date of those Notes.

 

CHANGE OF COMPANY NAME

 

If passed, the Resolution will change the name of the Company to Nautilus Marine Services PLC, to reflect the proposed change in the Company's principal business. The change of name will take effect upon the issue by Companies House of a certificate of incorporation in the new name.

 

Upon the change of name being registered at Companies House, the Company's AIM TIDM will be changed to NAUT. The Company's website address will be changed to www.nautilusmarineplc.com with effect from Admission.

 

TAKEOVER CODE

 

At Admission, the Takeover Code will continue to apply to the Company. Under Rule 9 of the Takeover Code, where any person who, together with persons acting in concert with him or her, is interested in shares which in aggregate carry not less than 30 per cent. but does not hold shares carrying more than 50 per cent., of the voting rights of a company that is subject to the Takeover Code and such person, or any persons acting in concert with him or her, acquires an interest in any other shares in the company which increases the percentage of shares carrying voting rights in which he or she is interested, such person would normally have to extend a general offer to all holders of any class of equity share capital or other class of transferable securities carrying voting rights of that company for cash at not less than the highest price paid by him or her, or parties acting in concert with him or her, during the 12 months prior to the announcement of the offer. Once a person, together with persons acting in concert with him or her, is interested in shares which in aggregate carry more than 50 per cent. of the voting rights of a company that is subject to the Takeover Code, any further acquisition of shares would not normally require such a general offer, subject to the provisions of Note 4 of Rule 9.1.

 

Under the Takeover Code, a concert party arises where persons acting together pursuant to an agreement or understanding (whether formal or informal and whether or not in writing) actively cooperate, through the acquisition by them of an interest in shares in a company, to obtain or consolidate control of the company or to frustrate an offer for a company. Control means holding, or aggregate holdings, of an interest in shares carrying 30 per cent. or more of the voting rights of the company, irrespective of whether the holding or holdings give de facto control.

 

At Admission, the aggregate holding of the Concert Party will be in excess of 50 per cent. of the Company's voting rights. Each member of the Concert Party, with the exception of HKN, is therefore entitled to acquire further Ordinary Shares without being required to make a mandatory offer, provided that each of their individual interests in Ordinary Shares does not increase through a Rule 9 threshold.

 

HKN's holding represents 35.5 per cent. of the Company's voting rights and therefore, were HKN to acquire further Ordinary Shares which increases the percentage of shares carrying voting rights in which they are interested, they would be required to make a mandatory offer under Rule 9 of the Takeover Code.

 

Exercise by MCP of the conversion rights pursuant to all the Convertible Loan Notes proposed to be issued to them could result in them being issued Ordinary Shares representing in excess of 30 per cent. of the Company's issued share capital as enlarged by such issuance. Shareholders should note that if MCP acquires an interest in Ordinary Shares which increases its percentage of shares carrying voting rights through 30 per cent., MCP will incur an obligation under Rule 9 of the Takeover Code to make a general offer (unless a dispensation from this requirement has been obtained from the Panel in advance).

 

Further information on the provisions of the Takeover Code can be found in paragraph 19 of Part V of the Admission Document.

 

GENERAL MEETING AND VOTING INTENTIONS

 

Set out at the end of the Admission Document is a notice convening a General Meeting to be held on Wednesday 8 February 2017 at 9:00 a.m. (GMT) at the Company's registered office at 3 More London Riverside, London SE1 2AQ at which the Resolution will be proposed as a special resolution which to be passed will require a majority of 75 per cent. of the votes cast to be in favour of the Resolution.

 

If passed, the Resolution will (in summary):

 

a)   approve, including for the purposes of the AIM Rules, implementation of either or both of Transaction A and Transaction B and authorise the Directors to take all such steps as may be necessary, expedient or appropriate to carry out the Transactions with such non-material modifications as they may approve;

b)   authorise the Directors, in accordance with section 551 of the Companies Act, to exercise all the powers of the Company to allot shares in the Company and to grant rights to subscribe for, or to convert any security into, shares in the Company up to an aggregate nominal amount of £484,888.69 including in connection with the creation and issue of the Convertible Loan Notes and the grant of options pursuant to the Share Option Scheme;

c)   to disapply, in accordance with Section 570 and/or Section 571 of the Act (as applicable), the statutory pre-emption rights which apply on the issue of shares for cash to enable the Company to issue the Convertible Loan Notes, to grant options pursuant to the Share Option Scheme in respect of Ordinary Shares with an aggregate nominal value of £36,112.19 representing 10 per cent. of the Company's current issued Share Capital and in addition to effect a non-pre-emptive issue of Ordinary Shares for cash up to an aggregate nominal amount of £36,112.19 representing 10 per cent. of the Company's current issued share capital; and

d)   change the name of the Company to Nautilus Marine Services PLC.

 

The authorities to be granted as summarised in paragraphs (b) and (c) above shall expire on the conclusion of the next Annual General Meeting of the Company, but under these authorities the Company may, before such expiry, make an offer or agreement which would or might require shares to be allotted or rights to subscribe for, or to convert any security into, shares to be granted after such expiry and the Directors may allot shares or grant rights to subscribe for, or to convert any security into, shares (as the case may be) in pursuance of such an offer or agreement as if the authority conferred hereby had not expired.

 

The authority to be granted as summarised in paragraph (b) above shall be used in respect of the creation and issue of the Convertible Loan Notes as to £329,706.28, up to £36,112.19 in respect of the grant of options and up to the same amount in respect of non-pre-emptive issues of shares for cash.

 

HKN and Lyford, who hold 12,804,768 Ordinary Shares representing 35.5 per cent. of the Issued Share Capital and 9,202,026 Ordinary Shares representing 25.5 per cent. of the Issued Share Capital, respectively, have each indicated that they intend to vote in favour of the Resolution.

 

ADMISSION

 

As each of the Transactions constitutes a reverse takeover of the Company under Rule 14 of the AIM Rules, Shareholder consent to the Transactions is required at the General Meeting. Provided that all conditions for the completion of either Transaction A or Transaction B are satisfied, save only for passing of the relevant Resolution, if the Resolution is duly passed at the General Meeting, the admission of the Company's Ordinary Shares to trading on AIM will be cancelled (immediately prior to Admission) and the Issued Share Capital will be re-admitted to trading on AIM.

 

For the avoidance of doubt, Transaction A and Transaction B are not inter-conditional and

Admission will be effective in the event that only one is completed.

 

Application has been made to the London Stock Exchange for the Issued Share Capital to be admitted to trading on AIM. Admission is expected to take place at 8.00 a.m. on 9 February 2017.

 

The Ordinary Shares are eligible for CREST settlement. CREST is a paperless settlement procedure enabling securities to be evidenced otherwise than by a certificate and transferred otherwise than by a written instrument in accordance with the requirements of CREST. The New Articles permit the holding and transfer of Ordinary Shares to be evidenced in uncertificated form in accordance with the requirement of CREST. Accordingly, following Admission, settlement of transactions in Ordinary Shares may take place within the CREST system if the relevant Shareholder so wishes. CREST is a voluntary system and Shareholders who wish to receive and retain share certificates will be able to do so.

 

RECOMMENDATION

 

The Directors consider that the Proposals are in the best interests of the Company and Shareholders as a whole. Accordingly, the Directors recommend that Shareholders vote in favour of the Resolution at the General Meeting as they intend to do so in respect of their own beneficial holdings amounting, in aggregate, to 524,399 Ordinary Shares, representing 1.45 per cent. of the Issued Share Capital.

 

Important notice

 

This announcement and the information contained herein is not for release, publication or distribution, directly or indirectly, in whole or in part, in or into or from the United States, Canada, the Republic of South Africa, Australia, Japan or any other jurisdiction where to do so might constitute a violation of the relevant laws or regulations of such jurisdiction.

 

Certain statements in this announcement are forward-looking statements which are based on the Company's expectations, intentions and projections regarding its future performance, anticipated events or trends and other matters that are not historical facts. These forward-looking statements, which may use words such as "aim", "anticipate", "believe", "intend", "estimate", "expect" and words of similar meaning, include all matters that are not historical facts. These forward-looking statements involve risks, assumptions and uncertainties that could cause the actual results of operations, financial condition, liquidity and dividend policy and the development of the industries in which the Company's businesses operate to differ materially from the impression created by the forward-looking statements. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Given those risks and uncertainties, prospective investors are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date of such statements and, except as required by the FCA, the London Stock Exchange or applicable law, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

 

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

 

finnCap, which is authorised and regulated in the United Kingdom by the FCA, is acting for Global and for no one else in connection with the Proposals and will not be responsible to anyone other than Global for providing the protections afforded to clients of finnCap or for affording advice in relation to the Proposals, or any other matters referred to herein.

 

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

 


This information is provided by RNS
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