Acquisition

23rd Mar 2006 07:00

Zareba PLC23 March 2006 For publication in the United Kingdom only. Not for release, publication ordistribution in or into any other jurisdiction including the United States,Canada, Australia, South Africa or Japan. Zareba plc ("Zareba" or the "Company") Acquisition of Quadrise International Limited Zareba plc is pleased to announce that, yesterday, it conditionally agreed toacquire the whole of the issued share capital of Quadrise International Limited("Quadrise") from Masefield Energy Holdings AG ("Masefield Energy")and others, subject to Shareholder approval. The consideration under the Acquisition values Quadrise at £45 million and will be satisfied by the allotment of the Consideration Shares, as detailed below. In addition to the Acquisition, the Company proposes the following: • a waiver of Rule 9 of the City Code; • a Placing and re-admission to trading on AIM; • the change of name to Quadrise Fuels International plc; and • the Consolidation of Shares (together, the "Proposals"). A document setting out details of the Proposals (the "Admission Document") isbeing posted to Shareholders today The Admission Document is also available onthe Company's website www.zarebaplc.com and from the offices of Smith &Williamson Corporate Finance Limited, 25 Moorgate, London EC2R 6AY. As a resultof the publication of the Admission Document, the suspension in trading on AIMof the Company's shares has been lifted. Extracts from the Admission Document are set out in Appendix I to thisannouncement. As the transaction is a reverse takeover of the Company under theAIM Rules, the Acquisition requires approval of Shareholders at an ExtraordinaryGeneral Meeting, notice of which has been sent to Shareholders with theAdmission Document. Commenting on the transaction, Brian Moritz, Executive Chairman, stated, "We aredelighted to be so close to the completion of the acquisition of Quadrise, andto be able to recommend it to Shareholders for approval. We believe that thebusiness of Quadrise has a bright future and that it will provide the value forour Shareholders which we have been seeking since Zareba's inception. We lookforward to the future development of the Enlarged Group." Ian Williams, proposed Executive Chairman, commented, "We believe that theQuadrise MSAR(R) fuels business has substantial international potential. Thetransaction with Zareba represents a major milestone in the development of theQuadrise business. We are pleased with the level of support received frominvestors and the Proposed Directors will aim to grow the business to delivervalue for all Shareholders." This summary should be read in conjunction with the information in Appendix Iand in the Admission Document. Enquiries:John Woolgar 07813 818 241 (m)Zareba plc 01483 890 004 (o) Azhic Basirov 020 7131 4000Smith & Williamson Corporate Finance Limited Victoria Thomas 020 7493 3713Parkgreen Communications 23 March 2006 DisclaimerThe Existing Directors and the Proposed Directors, whose names, businessaddresses and functions appear on page 4 of the Admission Document, acceptresponsibility for all the information contained in this announcement (otherthan the information for which the Quadrise Directors and James Daley acceptresponsibility as detailed below) including collective and individualresponsibility for compliance with the AIM Rules. To the best of the knowledgeand belief of the Proposed Directors and the Existing Directors (who have takenall reasonable care to ensure that such is the case) the information containedin this document for which they are responsible is in accordance with the factsand does not omit anything likely to affect the import of such information. The Quadrise Directors together with James Daley, a director and a majorshareholder of Masefield Energy, accept responsibility for the informationrelating to Masefield Energy, the information contained in paragraph 5 (e) ofPart VIII of the Admission Document and the information contained in paragraph 9of Part VIII of the Admission Document (except for the information in paragraph9 which also appears elsewhere in the Admission Document). James Daley aloneaccepts responsibility for the financial information on Masefield AG containedin Part II of the Admission Document and the section entitled "Information onQuadrise" in Appendix I of this announcement. To the best of the knowledge andbelief of the Quadrise Directors and James Daley (who have taken all reasonablecare to ensure that such is the case) the information contained in this documentfor which they are responsible is in accordance with the facts and does not omitanything likely to affect the import of such information. Smith & Williamson Corporate Finance Limited, which is authorised and regulatedin the United Kingdom by the Financial Services Authority, is the Company'snominated adviser and, following Admission, will be joint broker for thepurposes of the AIM Rules. Its responsibilities as the Company's nominatedadviser under the AIM Rules will be owed solely to the London Stock Exchange andwill not be owed to the Company or to any Existing Director or Proposed Directoror to any other person in respect of his reliance on any part of thisannouncement. No representation or warranty, express or implied, is made bySmith & Williamson as to any of the contents of this announcement for which theCompany, the Existing Directors and the Proposed Directors are solelyresponsible and without limiting the statutory rights of any person to whom thisannouncement is sent, no liability is accepted by Smith & Williamson for theaccuracy of any information or opinions contained in this document or for anyomission of any material information for which it is not responsible. Smith &Williamson is acting for the Company and no one else and will not be responsibleto any other person for providing the protections afforded to customers of Smith& Williamson nor for providing advice in relation to the contents of thisdocument or any matter referred to herein. Hichens Harrison & Co. plc, which is authorised and regulated in the UnitedKingdom by the Financial Services Authority, is the Company's broker and,following Admission, joint broker for the purposes of the AIM Rules. Hichensis acting for the Company and no one else and will not be responsible to anyother person for providing the protections afforded to customers of Hichens norfor providing advice in relation to the contents of this announcement or anymatter referred to herein. No liability whatsoever is accepted by Hichens forthe accuracy of any information or opinions contained in this announcement orfor the omission of any material information, for which it is not responsible. This announcement does not constitute an offer of, or the solicitation of anyoffer to buy, any of the ordinary shares which are proposed to be offered to anyperson in any jurisdiction to whom or in which such offer or solicitation isunlawful. The distribution of this announcement in certain jurisdictions may berestricted by law and therefore persons into whose possession this announcementcomes should inform themselves about and observe any such restrictions. Anyfailure to comply with these restrictions may constitute a violation of thesecurities laws of such jurisdiction. The ordinary shares which are proposed tobe offered have not been, nor will they be, registered under the United StatesSecurities Act of 1933 (as amended) (the "Securities Act") and may not beoffered or sold, directly or indirectly, in or into the United States absentregistration or an exemption from registration. There will be no public offer ofsecurities in the United States or any other jurisdiction. This announcement does not constitute or form part of an offer, or anysolicitation of an offer, for securities and any purchase or application forshares in the placing may only be made on the basis of information contained inthe formal AIM admission document issued by the Company in connection with theProposals. APPENDIX IExtracts from the Admission Document PLACING AND ACQUISITION STATISTICS Pre-Consolidation Post-Consolidation Number of Shares in issue before the 203,300,000 20,330,000Acquisition and Placing Number of Consideration Shares to be issued 3,758,271,417 375,827,136pursuant to the Acquisition Number of Initial Placing Shares and Placing 647,697,213 64,769,972Shares to be issued Consideration Shares as a percentage of 81.50% 81.50%Enlarged Share Capital Initial Placing Shares and Placing Shares as a 14.05% 14.05%percentage of Enlarged Share Capital Number of Shares or, following Consolidation, 4,611,268,630 461,126,863number of New Shares (before adjusting forfractions) in issue on Admission Market capitalisation of the Company at the £92.2 millionPlacing Price on Admission AIM Symbol QFI ISIN number GB00B0661N17 ISIN number following Consolidation GB00B11DDB67 EXPECTED TIMETABLE OF PRINCIPAL EVENTS Date of publication of Admission Document 23 March 2006 Trading resumes in Existing Shares 23 March 2006 Last time and date for receipt of Forms of Proxy for the 3.00 p.m. onExtraordinary General Meeting 16 April 2006 Extraordinary General Meeting 3.00 p.m. on 18 April 2006 Completion of the Acquisition 8.00 a.m. on 19 April 2006 Admission effective and dealings in Enlarged Share Capital 19 April 2006commence Despatch of definitive share certificates (where applicable) 3 May 2006for Consideration Shares, Initial Placing Shares and PlacingShares, and New Shares to Existing Shareholders LETTER FROM THE CHAIRMAN OF ZAREBA ZAREBA PLC(Incorporated in England & Wales under the Companies Act 1985 with RegisteredNo. 5267512) Directors: Registered Office:Brian Moritz (Executive Chairman) Third FloorJohn Woolgar (Executive) 55 Gower StreetJames Burgess (Executive) LondonWC1E 6HQ 23 March 2006 To holders of Existing Shares Dear Shareholder Proposed acquisition of Quadrise International Limited Proposed waiver of Rule 9 of the City Code Proposed Placing and Re-admission to trading on AIM Proposed change of name to Quadrise Fuels International plc Consolidation of Shares Introduction On 9 December 2005, Zareba announced that it had entered into a PreliminaryMerger Agreement with Masefield Energy to acquire all of the issued sharecapital of Quadrise. The Preliminary Merger Agreement provided that anyacquisition by the Company of Quadrise would be conditional, inter alia, onsatisfactory due diligence being undertaken on Quadrise and that theconsideration for the Acquisition would be satisfied entirely by the issue ofnew ordinary shares in the Company to the shareholders of Quadrise, withcompletion of the Acquisition being conditional on Admission of the Company'sEnlarged Share Capital to trading on AIM. As the Acquisition will constitute areverse takeover under the AIM Rules, trading in the Shares was suspendedpending publication of an AIM admission document in respect of the proposedEnlarged Group and is expected to resume today. Having completed its due diligence, the Company announced today that it hasentered into a formal agreement to acquire the whole of the issued share capitalof Quadrise. The consideration under the Acquisition values Quadrise at £45million and will be satisfied by the allotment of the Consideration Shares. The Company is proposing to raise £12.9 million (before expenses) through thePlacing. Of the net proceeds of the Placing, approximately £4.6 million willfund the remainder of the cost of the acquisition of Quadrise Limited byQuadrise, while the balance will provide working capital to support the growthand development of the Enlarged Group. It was agreed in the Preliminary Merger Agreement that the Company would, as apre-condition of the Acquisition, ensure that it had net cash of £1.5 millionavailable at the time when the Acquisition completed. As announced on 9 December2005, the Company obtained a commitment from James Burgess, one of the ExistingDirectors, to underwrite the subscription of Shares at 1.75p per Share up to amaximum amount of £250,000 to ensure that the Company could meet thisrequirement. This subscription is now being made by way of the Initial Placingin which the Initial Placing Shares are to be placed with James Burgess and onesub-underwriter introduced by him, to raise the £250,000. The Initial Placing isconditional upon Admission. The Consideration Shares and the aggregate of the Initial Placing Shares and thePlacing Shares will represent approximately 81.5 per cent. and 14.05 per cent.of the Enlarged Share Capital, respectively. As the transaction is a reverse takeover of the Company under the AIM Rules, theAcquisition requires approval of Existing Shareholders at the ExtraordinaryGeneral Meeting and it is also conditional on the passing of certain otherresolutions. Notice of the Extraordinary General Meeting which sets out theresolutions can be found on pages 142 and 143 of the Admission Document. Following the passing of the Resolutions at the EGM and completion of theAcquisition, the Concert Party will have an aggregate holding of 3,665,341,012Shares or, on Consolidation, 366,534,097 New Shares, representing 79.49 percent. of the Enlarged Share Capital. As the Concert Party will be interested inmore than 30 per cent. of the Enlarged Share Capital, in normal circumstances ageneral offer to Existing Shareholders would be required under Rule 9 of theCity Code to acquire all the Shares or New Shares not held by the Concert Party.However, the Panel has agreed to waive the requirement for such a general offerto be made subject to the approval of the holders of Existing Shares beingobtained. Accordingly, Existing Shareholders' consent will be sought at the EGMto approve the reverse takeover and the waiver of the requirement for a generaloffer to be made (as described further below). If Resolutions 1 to 5 are duly passed at the EGM, the Company's existingquotation on AIM will be cancelled and the Company will apply immediately forthe Enlarged Share Capital to be admitted to trading on AIM. The purpose of the Admission Document is to provide you with information on theProposals and to explain why the Board considers the Proposals to be in the bestinterests of the Company and the Existing Shareholders as a whole and why theyrecommend that Existing Shareholders vote in favour of the Resolutions to beproposed at the Extraordinary General Meeting. Background to and reasons for the Acquisition The Company has been considering a number of investments in order to meet thecriteria of the London Stock Exchange for investing companies to make anacquisition or acquisitions which constitute a reverse takeover. The Companysubsequently entered into discussions with Masefield Energy, with a view toacquiring Quadrise in a reverse transaction. The Directors believe that the acquisition of Quadrise should substantiallyenhance shareholder value and will be in the interests of both companies andtheir shareholders. Through the Acquisition the Company will obtain: • certain rights to promote and develop projects for the commercialapplication of the Akzo Nobel proprietary MSAR(R) oil process technology securedby Quadrise under the Alliance Agreement; • a 20.6 per cent. equity interest in Quadrise Canada which, subjectto meeting certain performance targets, has the exclusive rights to use theMSAR(R) technology for hot water, steam and power production in Canada. Quadrisehas, in addition, the right to a royalty of 1.67 per cent. (directly) and 5 percent. (indirectly through its holding in Quadrise Limited) of the net pre-taxprofit of Quadrise Canada; • a potential 49.7 per cent. interest in Quadrise US, a business information, which, pursuant to a memorandum of understanding between QuadriseAmerica Inc. (a wholly owned subsidiary of Quadrise Canada), RJL Holdings LP andQuadrise, is intended to have certain rights to the manufacture and marketing ofMSAR(R) fuels for the thermal power generation market in the United States andMexico. Quadrise Canada (through Quadrise America Inc.) has a potential 29.7 percent. interest in Quadrise US, hence the combined effective interest in QuadriseUS is expected to be 55.9 per cent. before any dilution associated with localfinancing; • a 100 per cent. interest in Quadrise Limited which is theregistered owner of the MSAR(R) trademark and a patent relating to the combustion of oil in water emulsion fuels in turbines, and which also has a 14.3 per cent. interest in and rights to a royalty of 5 per cent. of the net pre tax profit of Quadrise Canada; • a 100 per cent. interest in Quadrise Power Systems AG, a Swissregistered company, which it is intended will be responsible for the developmentof the MSAR(R) fuels business in major markets outside North America throughbusiness associations with joint venture partners or direct contracts with fueluser clients, as appropriate; • Quadrise's management team and contracted consultants which givesthe Company access to an in-house team of commercial and technical experts whoare experienced in the oil and energy business. The proposed executive directorsare Ian Williams, Bill Howe, Tony Kallis and Hemant Thanawala, who haveextensive experience in the energy and oil industries. The contracted specialistconsultants are experts in the energy, oil and power generation sectors and inthe specialised field of emulsion fuels processing, marketing and combustion;and • access to opportunities through the established relationships inthe energy and oil industries and markets world wide of Masefield Energy, aswell as availability of specialist services from group affiliates, on arms'length market terms, covering oil procurement and operations, price and freightrisk management, transaction financing and other trading related activities. Information on Quadrise As outlined above, Quadrise, a subsidiary of Masefield Energy, holds a portfolioof managed, affiliate and associate interests all of which are engaged indeveloping business activities associated with the manufacture and marketing ofQuadrise MSAR(R) fuels. The MSAR(R) fuels manufacturing process uses proprietaryAkzo Nobel oil emulsification technology for which Quadrise has certain rightsto promote and market pursuant to the Alliance Agreement. MSAR(R) is a liquid fuel consisting of very fine oil particles dispersed in awater carrier effectively producing a pre-atomised fuel. This enhances conceptspreviously used in emulsified fuels, enabling superior carbon burnout, improvingthermal efficiency and reducing emissions. Further information on Quadrise and MSAR(R) fuel is set out in Part II of theAdmission Document. Information on Zareba The Company was first admitted to AIM on 14 February 2005 with the statedintention to make investments in the mining and minerals sector. Its firstinvestment was announced on 8 June 2005, and was in a company developing adiamond mine in northern Namibia. Initial investments of N$1,000,000(approximately £85,000) were made with an agreement to subscribe up to a furtherN$1,000,000 on similar terms, as required. Following receipt of a disappointingcompetent person's report the Company has agreed to write off its initialinvestments and has been released from any obligation to invest further. In preparation for the Acquisition, the Company has also written off a smallinvestment in a copper mining venture in Cuba and has transferred to BrianMoritz and James Burgess, at cost, an investment made by the Company in achromite mining venture in South Africa. This leaves the Company with no investments other than cash and no commitmentsto invest other than in connection with the Proposals. Intentions regarding the Company Following completion of the Proposals, the Proposed Directors intend that thestrategic focus of the Company will be to develop projects for the productionand sale of Quadrise MSAR(R) fuels to power station operators and others throughthe establishment of viable manufacturing locations and supply chains for majormarkets. The intention is that future revenue for the Company will beunderpinned through the negotiation of long term supply contracts and jointventures with key power utilities and steam generating industries and that thebusiness will be supported by the creation by the Group of a recognisedspecialist central resource base. Save for the Existing Directors, Zareba does not have any employees. Details ofthe proposals regarding the Existing Directors, following the Acquisition, areprovided in paragraph 6(b) of Part VIII of the Admission Document. The Acquisition Under the terms of the Acquisition, Zareba is to acquire all the issued QuadriseShares for £45,000,000 to be satisfied by the allotment and issue of theConsideration Shares at an issue price of approximately 1.2p per Share (12p perNew Share on Consolidation). The Acquisition is conditional, inter alia, on: (i) the passing of Resolutions 1, 2, 3, 4 and 5 at the EGM; (ii) the Placing having become unconditional in all respects save as regards completion of the Acquisition and Admission; and (iii) Admission becoming effective. The Acquisition will not complete if these conditions have not been satisfied by30 April 2006 or such later date as Zareba and Masefield Energy may decide. The Quadrise Shares will be acquired free from all liens, charges, equitableinterests, encumbrances and third party rights and together with all rights nowor hereafter attaching thereto, including the right to all dividends and otherdistributions, if any, hereafter declared, made or paid. Inducement Fee Arrangements Under the terms of the Preliminary Merger Agreement, the Company agreed to payMasefield Energy a fee to meet part of the costs of Masefield Energy's advisersin the event that the Acquisition does not complete, as an inducement toMasefield Energy to undertake the transaction. The fee amounts to £24,800(inclusive of Value Added Tax if any), being the equivalent of one per cent. ofthe market value of the Company prior to the announcement of the Proposals. Thefee was agreed to be payable to Masefield Energy if the Proposals did notproceed as a result of: (1) the Company having made a material misrepresentationconcerning itself or its business affairs; or (2) the due diligence carried outby Masefield Energy disclosing a material adverse matter which was not remedied(if capable of remedy) to the reasonable satisfaction of Masefield Energy. TheAcquisition Agreement provides that Zareba will pay this fee in the event thatMasefield is entitled to rescind the Acquisition Agreement. Similar provisionsunder which Masefield Energy may become liable to contribute up to £75,000 toZareba's costs were contained in the Preliminary Merger Agreement and theAcquisition Agreement. The Initial Placing and the Placing The Company proposes to raise £11.9 million (net of expenses) through theInitial Placing and the Placing. Pursuant to the Placing Agreement, Hichens hasagreed to act as the Company's agent in relation to the Placing. However,Hichens will not be underwriting the issue of the Placing Shares. Pursuant tothe Initial Placing, James Burgess and a sub-underwriter introduced by him haveagreed to subscribe £250,000. Further details of the Initial Placing are set outin paragraph 14(a) of Part VIII of the Admission Document. The Placing is conditional upon the Placing Agreement becoming unconditional inall respects and not having been terminated in accordance with its terms byHichens. The Placing Agreement is conditional, inter alia, upon the passing ofResolutions 1 to 5 at the EGM, the completion (subject only to Admission) of theAcquisition and the Admission of the Placing Shares no later than 27 April 2006(or such later date, being not later than 30 April 2006, as the Company, Hichensand Smith & Williamson may, prior to such date, agree). Further particulars of the Placing Agreement are set out in paragraph 11.1(d) ofPart VIII of the Admission Document. Your attention is drawn to Part III of the Admission Document headed "RiskFactors", where information on risk factors associated with making an investmentin the Company is set out. Use of Funds An amount of approximately £4.6 million of the net proceeds of the Placing willbe used to fund the cash consideration for the acquisition of Quadrise Limitedby Quadrise. The balance of the net proceeds of the Placing will provide fundingfor working capital to support the growth and development of the Enlarged Group. Details of the Consideration Shares, Initial Placing Shares and Placing Shares The Consideration Shares will be issued credited as fully paid and will, inaggregate, represent approximately 81.50 per cent. of the Enlarged ShareCapital. The Initial Placing Shares and Placing Shares will be issued credited as fullypaid and, in aggregate, will represent approximately 14.05 per cent. of theEnlarged Share Capital. Following the Consolidation, the Consideration Shares, Initial Placing Sharesand Placing Shares will rank pari passu with the Existing Shares in allrespects, including the right to receive all dividends or other distributionsdeclared, made or paid after the date of the Admission Document. Financial effects of the Acquisition and the Placing An unaudited pro forma statement of consolidated net assets of the EnlargedGroup, prepared for illustrative purposes only, showing the impact of theAcquisition, the Initial Placing and the Placing, is set out in Part VI of theAdmission Document. The City Code The terms of the Acquisition give rise to certain considerations under the CityCode. Brief details of the Panel, the City Code and the protections they affordare described below. The City Code has not, and does not seek to have, the force of law. It has,however, been acknowledged by government and other regulatory authorities thatthose who seek to take advantage of the facilities of the securities markets inthe United Kingdom should conduct themselves in matters relating to takeovers inaccordance with best business standards and so according to the City Code. The City Code is issued and administered by the Panel. The City Code applies toall takeover and merger transactions, however effected, where the offereecompany is, inter alia, a listed or unlisted public company resident in theUnited Kingdom. The Company is such a company and its shareholders are entitledto the protection afforded by the City Code. Pursuant to Rule 9 of the City Code, when any person, or group of persons actingin concert, acquires shares which, when taken together with shares already heldby such person or persons, carry 30 per cent. or more of the voting rights of acompany which is subject to the City Code, such person or persons, is or arenormally required to make a general offer to all shareholders in that company toacquire their shares. Similarly, when any person or persons acting in concert already hold more than30 per cent. but not more than 50 per cent. of the voting rights of such acompany, a general offer will normally be required if any further shares areacquired. An offer under Rule 9 must be in cash and at the highest price paid, within thepreceding 12 months, for any shares in the company by the person required tomake the offer or any person acting in concert with him. For the purposes of the City Code, a concert party arises where persons actingin concert pursuant to an agreement or understanding (whether formal orinformal) actively co-operate, through the acquisition by any of them of sharesin a company, to obtain or consolidate control of that company. Control means asingle holding, or aggregate holdings, of shares carrying 30 per cent. or moreof the voting rights of the company, irrespective of whether the holding orholdings give de facto control. The vendors of a private company generally will be deemed to be acting inconcert. The members of the Concert Party are shareholders in Quadrise.Information on the members of the Concert Party is set out in paragraph 9 ofPart VIII of the Admission Document. Following completion of the Acquisition, the members of the Concert Party willhold 3,665,341,012 Shares or, following Consolidation, 366,534,097 New Sharesrepresenting 79.49 per cent. of the Enlarged Share Capital. The Panel hasagreed, however, to waive the obligation to make a general offer under Rule 9 ofthe City Code that would otherwise arise on completion of the Acquisition,subject to the approval of the Existing Shareholders at the ExtraordinaryGeneral Meeting voting on a poll. Accordingly, Resolution 2 is being proposed atthe Extraordinary General Meeting to be passed, it will require the approval ofa simple majority of votes cast on the poll. Shareholders should be aware that, following completion of the Acquisition, themembers of the Concert Party will between them hold over 50 per cent. of theEnlarged Share Capital, and (for so long as they continue to be treated asacting in concert) may accordingly be able to increase their aggregateshareholding without incurring an obligation under Rule 9 of the City Code tomake a general offer to all Shareholders to acquire their Shares or, followingConsolidation, New Shares, although individual members of the Concert Party withthe exception of Masefield Energy will not be able to increase their percentageholdings through a Rule 9 threshold without Panel consent. Shareholders shouldnote that as Masefield Energy will hold 59.09 per cent. of the Enlarged ShareCapital it may be able to increase its shareholding without incurring anobligation under Rule 9 of the City Code to make a general offer to allShareholders. New Board On Admission, Messrs Woolgar, and Burgess and I have agreed to resign asdirectors of the Company. We will receive compensation for loss of office,details of which are provided in paragraph 6(b) of Part VIII of the AdmissionDocument. The New Board will comprise: Ian Williams, Executive Chairman, aged 59 Ian Williams joined Masefield in 1999 with responsibility for the developmentand management of business ventures. In this capacity, he led the strategy tosecure the portfolio of assets and related business interests that culminated inthe formation of Masefield Energy. Prior to joining Masefield, Mr Williams spentover 27 years with the Royal Dutch Shell Group in various capacities includingas Managing Director and Deputy Chairman of Shell South Africa, Vice President(Downstream) of Shell Philippines and most recently as Head of Strategy &Consulting (Downstream) at Shell International Petroleum Company in London. Hehas also been actively involved in related industry and business associations. Bill Howe, President and Chief Executive Officer, aged 59 Bill Howe began his career as a process design engineer in the water engineeringand oil refining industries prior to joining Foster Wheeler in South Africa in1975 as Business Development Manager. During his time at Foster Wheeler, Mr Howeheld a number of senior executive positions in South Africa as well as the UK,the last one being on the main board of Foster Wheeler Energy Ltd, responsiblefor international sales and marketing. He subsequently joined Bateman ProjectHoldings Limited in 1999 as executive director responsible for the company'soil, gas, energy and water engineering businesses. Since 2004, Mr Howe hasoperated as an independent consultant on technical and commercial issues relatedto the oil, gas, power, and process plants industries. Mr Howe has a BSc Hons inChemical Engineering from Birmingham University. Tony Kallis, Commercial Director, aged 57 Tony Kallis is a qualified chemical engineer with over 30 years experience inthe oil and energy field. He has spent 30 years with the Royal Dutch/Shell Groupduring which time he progressed from refining technology and optimisationactivities, to supply and distribution functions and finally to marketing andsenior general management. Tony has held various senior management and boardpositions within Shell Group companies including that of chairman of severalsubsidiary and joint venture boards in Southern Africa. From 1997 to 1999 Tony was based in The Hague and worked as a Global LeadershipConsultant within the Shell group, leading substantial programmes in South EastAsia, South America and Europe. His most recent role at Shell includedresponsibility for all commercial business in Southern Africa as well asmembership of several global teams responsible for formulating policy andstrategy for specialised downstream oil business sectors. Since leaving Shell in 2002, he has operated as an independent consultant to theoil and energy industries and has worked with Masefield on Quadrise businessmatters in that capacity. Hemant Thanawala, Finance Director, aged 48 Hemant Thanawala is a Chartered Accountant with over 27 years' professional andcommercial experience. He joined Masefield in 2001 having previously served forthree years as Chief Financial Officer of Premier Telesports Group which wasinvolved in the entertainment sector in parts of Eastern Europe and the formerSoviet Union. In this position, he played a key role in two private placings andthe listing of the group on the Vienna Stock Exchange. Prior to that, MrThanawala served as the finance director of Rostel Group, a multi-nationalmanufacturer and distributor of blue-chip branded consumer products for eightyears. Before joining Rostel Group, Mr Thanawala was involved in professionalpractice in the UK, qualifying with KMG Thomson McLintock (now KPMG). Laurie Mutch, Non-executive Director, aged 58 Laurie Mutch is a management consultant providing advice on governance,strategic planning, business development and change management to multi-nationalorganisations. He has 25 years' experience in the energy industry with the RoyalDutch/Shell Group where he sat on the Board of Shell International Gas & Power,as Executive Director for business development in the Eastern Hemisphere,leading the commercial appraisal and development of all Shell's gas and powerprojects in the Middle East, South Asia, China, Philippines and the Russian FarEast. From 1994 to 1996, he was the Finance Director in Shell International Gas,and Principal Executive to the International Energy Agency's Coal IndustryAdvisory Board (CIAB), a forum of coal industry leaders and a main source ofadvice for coal policy matters to the International Energy Agency in Paris. Prior roles include senior management positions in Shell's Coal and ChemicalDivisions. During his last two years of service he was Group Chief InformationOfficer and on the Microsoft and Dell Enterprise Advisory Boards. Mr Mutch holds a BSc in Mathematics & Physics and an MSc in Astrophysics. Tony Lowrie, Non-executive Director, aged 63 Tony Lowrie is currently a managing director in ABN AMRO Bank, based in London.Mr Lowrie was chairman of ABN AMRO Asia Securities Limited, having originallybeen a partner of Hoare Govett Limited, which he joined in 1972. He has beeninvolved in Asian business for over 38 years, during which time he has residedin a number of Asian countries. He has been a non-executive director of severalquoted Asian closed end funds. He is a non-executive director of The Thai-EuroFund and The Edinburgh Dragon Fund. He has also been a non-executive director ofDragon Oil plc and for 18 years a main board director of JD Wetherspoon plc,both of which are admitted to the Official List. Details of the Proposed Directors' terms of appointment are set out in paragraph6(a) of Part VIII of the Admission Document. Key personnel and consultants Ian Hole, Vice-President Marketing and Logistics Ian Hole has worked in the energy industry for over 25 years including more than10 years in the field of emulsified fuels and has an MA in economics fromCambridge University. Mr Hole held a number of roles within the BritishPetroleum group and worked on the establishment of its joint venture withPetroleos De Venezuela SA to market Orimulsion(R). He then worked for the jointventure and subsequently transferred to Petroleos De Venezuela SA withresponsibility for commercial development. He left Petroleos De Venezuela SA in2000 to join former British Petroleum colleagues as a director of QuadriseLimited and transferred to Masefield in March 2005 specifically to develop theQuadrise initiative. Mr. Hole is to be employed by the Company from Admissionand details of his service agreement are given in paragraph 11.1(h) of Part VIIIof the Admission Document. Dr Simon Craige, Vice-President Technical Services Simon Craige holds a BSc in Applied Chemistry and a PhD in Bitumen Technology.He has expert specialised knowledge of emulsion science combined with commercialapplication experience and a substantial understanding of power generationtechnology and related engineering. Dr Craige was part of the British PetroleumResearch Centre team involved in the development of the specialised technologysupporting the Orimulsion(R) venture with Petroleos De Venezuela SA in the late1980s. He then transferred to the joint venture where he worked extensively inEurope in the co-ordination of major commercial developments associated with theconversion of thermal power stations to oil emulsion fuels. He joined Masefieldmid 2005, following a three-year term as managing director of a Danish oilre-refining company, DOG A/S. Dr Craige is to be employed by the Company fromAdmission and details of his service agreement are given in paragraph 11.1(i) ofPart VIII of the Admission Document. Dr Ian Duckels, Consultant Ian Duckels has over 30 years' experience in the oil, chemicals and miningindustries, having worked for both Shell and the British Petroleum group,including his involvement in the establishment of British Petroleum's Nerefcorefinery in Rotterdam as first Chairman of the management board. He has a BSc inChemistry, a PhD in Chemical Physics, a BSc in Mathematics & Astrophysics and isan associate of the Chartered Institute of Management Accountants. Dr Duckels isretained as a consultant by Quadrise under the agreement referred to inparagraph 11.2.1(e) of Part VIII of the Admission Document. Dr Alan Stockwell, Consultant Alan Stockwell joined Peter Dodd at Quadrise Limited in 1993. Prior to that, heworked for the British Petroleum Research & Development for over 15 years,leading the emulsion technology team responsible for the development ofOrimulsion(R). Dr Stockwell also served as a key member of the team that developedTransoil, a product used for the transportation of Wolf Lake bitumen in emulsionform. He has played a key role in the development of MSAR(R) with Quadrise. DrStockwell has a BSc in Chemistry and a PhD in Physical Chemistry. Dr Stockwellis retained as a consultant by Quadrise under the agreement referred to inparagraph 11.2.1(f) of Part VIII of the Admission Document. Paul Jennings, Consultant Paul Jennings joined Masefield in 2000 with responsibility for exploration andproduction finance and business development. He has over 25 years experience inthe oil and gas sector as an accountant, economist and commercial and businessdevelopment director. Mr Jennings spent 17 years with the British Petroleumgroup, ultimately serving as Head Petroleum Economist for British PetroleumExploration Limited. He subsequently spent seven years as an independentconsultant advising a number of clients including the Russian and Chinesegovernments and he also served as Commercial Director, Russia for BitechPetroleum. Mr Jennings is to be retained as a consultant by the Company fromAdmission under the agreement referred to in paragraph 11.1(e) of Part VIII ofthe Admission Document. Stephen Jenkins, Consultant Stephen Jenkins joined Masefield in 2003, responsible for all upstream technicalmanagement. He is also the chief executive of Nautical Petroleum plc. Mr Jenkinshas over 20 years' technical and management experience in exploration andproduction worldwide with a range of oil and gas companies. Prior to joiningMasefield, he spent 11 years at Nimir Petroleum where he was responsible for thedevelopment and evaluation of acquisition strategy and all technical dimensionsof the company's strategic planning. He has experience in a vast number ofregions including North and South America, the Middle East, North Africa, Russiaand other OECD countries. Mr Jenkins has an MSc in Petroleum Geology and DICfrom Imperial College of Science and Technology University of London, a BSc Honsin Geology from Queens University Belfast and is a Fellow of the GeologicalSociety of London. Mr Jenkins is to be retained as a consultant by the Companyfrom Admission under a consultancy agreement, details of which are given inparagraph 11.1(g) of Part VIII of the Admission Document. Peter Dodd, Consultant Peter Dodd founded Quadrise Limited in the early 1990s. Prior to that, he spentover 25 years with the British Petroleum group in various senior executive rolesin the chemicals, liquified petroleum gas and new energies divisions. He wasdeputy managing director of the British Petroleum joint venture company withPetroleos De Venezuela SA that developed and marketed Orimulsion(R) as a new power station fuel. Mr Dodd is retained as a consultant by Quadrise under theagreement referred to in paragraph 11.2.1(e) of Part VIII of the AdmissionDocument. It is anticipated that the Proposed Directors and certain other key personneland consultants will participate in the management incentive arrangementsdescribed below. Management incentive arrangements The Proposed Directors believe that it is important that directors and keypersonnel are appropriately motivated and rewarded and accordingly the Companyintends to introduce as soon as practicable following Admission, a share optionscheme in which qualifying personnel and directors will be eligible toparticipate. In addition, in recognition of their contributions to the development of theQuadrise Group, the Proposed Directors, certain members of the Concert Party andother key personnel and consultants have been granted options, conditional onAdmission, over 165,000,000 Shares or, following Consolidation, 16,500,000 NewShares amounting to 3.61 per cent. of the Enlarged Share Capital. These optionshave an exercise price of 2p per Share (or, following Consolidation, 20p per NewShare). Details regarding the number and terms upon which such options aregranted are set out in paragraphs 3, 5 and 9 of Part VIII of the AdmissionDocument. It is proposed that, in aggregate, no more than 10 per cent. of the issued sharecapital of the Company from time to time should be available under any and allshare option arrangements for directors and employees. Corporate governance The Existing Directors and the Proposed Directors recognise the importance ofsound corporate governance and the Proposed Directors intend to comply with theQCA's Corporate Governance Guidelines for AIM Companies published in 2005. TheCompany will establish, with effect from Admission, audit, nominations andcompensation committees with formally delegated duties and responsibilities.Laurie Mutch and Tony Lowrie will be members of each committee. The nominationscommittee will also include Ian Williams. The board will meet regularly and be responsible for strategy, performance,approval of major capital projects and the framework of internal controls. Theboard will have a formal schedule of matters specifically reserved to it fordecision, including matters relating to management structure and appointments,strategic and policy considerations, transactions and finance. To enable theboard to discharge its duties, all of the directors will receive timelyinformation. Briefing papers will be distributed to all directors in advance ofboard meetings, all Proposed Directors will have access to the advice andservices of the company secretary, who is responsible for ensuring that theboard procedures are followed and that applicable rules and regulations arecomplied with. The articles of association of the Company, summarised inparagraph 4 of Part VIII of the Admission Document, provide that the ProposedDirectors will subject themselves to re-election at the first opportunity aftertheir appointment and one third of the board members will voluntarily submitthemselves for re-election at each annual general meeting of the Company. Audit, compensation and nominations committees The audit committee will have primary responsibility for monitoring the qualityof internal controls and ensuring that the financial performance of the Companyis properly measured and reported on. In addition, it will receive and reviewreports from the Company's management and auditors. The audit committee willmeet not less than three times in each financial year and will have unrestrictedaccess to the Company's auditors. The compensation committee will, amongst other things, make recommendations tothe board on matters relating to the remuneration of the Chief Executive andother executive directors. The compensation committee will also makerecommendations to the board on proposals for the granting of share options andother equity incentives pursuant to any share option scheme or equity incentivescheme in operation from time to time. The nominations committee will have responsibility for leading the process ofnew board appointments and will make recommendations to the board. Internal financial control The New Board will be responsible for establishing and maintaining the EnlargedGroup's system of internal financial control and places importance onmaintaining a strong control environment. The key procedures which the ProposedDirectors intend to establish with a view to providing effective internalfinancial control include the following: • the Company will institute a monthly management reporting processto enable the Proposed Directors to monitor the performance of the EnlargedGroup; • the New Board will adopt and review a comprehensive annual budgetfor the Enlarged Group. Monthly results will be examined against the budget anddeviations will be closely monitored by the New Board; • the New Board will be responsible for maintaining and identifyingmajor business risks faced by the Enlarged Group and for determining theappropriate courses of action to manage those risks; and • fully consolidated management information will be prepared on aregular basis, at least quarterly. The Proposed Directors recognise, however, that such a system of internalfinancial control can only provide reasonable, not absolute, assurance againstmaterial misstatement or loss. The effectiveness of the system of internalfinancial control operated by the Enlarged Group will therefore be subject tocontinuing review by the Proposed Directors. The New Board intends to comply with Rule 21 of the AIM Rules relating todirectors' dealings as applicable to AIM companies and will also take allreasonable steps to ensure compliance by the Company's applicable employees. TheCompany has adopted a share dealing code for this purpose. Dealings and trading Application will be made by the Company for the Enlarged Share Capital to beadmitted to AIM following publication of the Admission Document. It is expectedthat Admission will take place and trading in the Shares or, followingConsolidation, the New Shares will commence on the first dealing day followingthat on which the Resolutions 1 to 5 relating to the Acquisition are passed atthe Extraordinary General Meeting. All Shares or New Shares, including theConsideration Shares, may be held in either certificated or uncertificated form(i.e. in CREST). CREST CREST is a paperless security transfer system, which enables securities to beheld otherwise than by a certificate and transferred otherwise than by writteninstrument. The Shares or, following Consolidation, New Shares will be madeeligible for settlement in CREST with effect from Admission. Accordingly, settlement of transactions in the Shares or New Shares may takeplace within the CREST system if the relevant holders so wish. CREST is avoluntary system and holders of Shares or New Shares who wish to receive andretain share certificates will be able to do so. Lock-ins and orderly market arrangements All of the Vendors, Proposed Directors, related parties and applicable employees(each as defined in the AIM Rules) who will, on Admission, own Shares or,following Consolidation, New Shares have undertaken with the Company, Hichensand Smith & Williamson that they will not (subject to certain exceptions)dispose of any of their Shares or, following Consolidation, New Shares until theexpiry of 12 months after the date of Admission and that, for a further periodof 12 months thereafter, they will not sell or dispose of any of their Shares orNew Shares except through the Company's broker(s) from time to time. Theseundertakings are in respect of a total of 3,936,271,417 Shares or, followingConsolidation, 393,627,136 New Shares representing 85.36 per cent. of theEnlarged Share Capital. In addition, certain Placees who are not Vendors, Proposed Directors, relatedparties or applicable employees, have agreed that they will not during the firsttwelve months following Admission sell or dispose of any Shares or New Sharesexcept through the Company's broker from time to time. Smith & Williamson has undertaken to the Company and Hichens that it will not(subject to certain exceptions) dispose of any of the Shares or, followingConsolidation, New Shares which are to be issued to it in connection with theProposals (as described in paragraph 11.1(d) of Part VIII of the AdmissionDocument) until the expiry of twelve months from the date of such issue andthat, for a further period of twelve months thereafter, it will not sell ordispose of any of the Shares or, following Consolidation, New Shares exceptfollowing consultation with the Company (unless it is not broker to the Companyat such time in which case any such sale or disposal will be through theCompany's broker). The provisions of the lock-in and orderly market arrangements will not apply incertain limited circumstances which include, inter alia: • the acceptance of, or the entering of an irrevocable undertakingto accept, a general offer for the whole of the issued equity share capital ofthe Company in accordance with the City Code; or • any transfer pursuant to a compromise or arrangement between theCompany and its creditors; or • any transfer for the purpose only of effecting the appointment ofa trustee or new trustee of a family settlement for the benefit of members ofthe immediate family of a locked-in Shareholder; or • any transfer by the personal representatives of a locked-inShareholder in the event that he should die; or • any transfer pursuant to a court order. Relationship Agreement Masefield Energy, which will hold 59.09 per cent. of the Enlarged Share Capital,has entered into a relationship agreement with Zareba in which it has undertakento ensure that the Company and the Enlarged Group can operate independently ofMasefield Energy and its associates so as to ensure that all transactions,relationships and agreements are on arms' length commercial terms. Furtherdetails of the Relationship Agreement are set out in paragraph 11.1(c) of PartVIII of the Admission Document. Consolidation of Share Capital In order to be more attractive to institutional investors, immediately prior toAdmission the Company is proposing to consolidate the Shares into New Shares onthe basis of 10 Shares for each New Share. A resolution to this effect is to beproposed at the EGM. Fractional entitlements as a result of the consolidationwill not be issued and will be aggregated and (so far as is practicable) sold inthe market for the benefit of the Company. Reporting period The Company's accounting reference date is 31 March. Dividends The Company intends to devote its cash resources to MSAR(R) fuel processing andsupply projects in the short to medium term and it is not anticipated that theCompany will pay a dividend in respect of the current financial period ending 31March 2006 but, having regard to the earnings, cash flows, distributablereserves and the prospects of the Company, the Proposed Directors intend toadopt a progressive but prudent dividend policy in the future. Annual General Meeting The Company has not yet held an Annual General Meeting and needs to do soshortly in order to comply with the requirements of the Act. The opportunity istherefore being taken to hold the Company's first Annual General Meeting on 18April 2006 after the EGM. You will find the notice convening the Annual GeneralMeeting on page 144 of the Admission Document. There is less than the usualbusiness to be dealt with at the Annual General Meeting as the Company's firstaccounting period ends on 31 March 2006 and there will be no audited accountsavailable to be laid before the meeting. Extraordinary General Meeting On pages 142 and 143 the Admission Document, you will find a notice convening anExtraordinary General Meeting of the Company, which is to be held at 3.00 p.m.on 18 April 2006 at the offices of Smith & Williamson, 25 Moorgate, London EC2R6AY. The resolutions to be proposed at the EGM will be as follows: 1) to approve the Acquisition for the purposes of Rule 14 of the AIM Rules; 2) to approve the Waiver; 3) to increase the Company's authorised share capital from £1,000,000 to £10,000,000; 4) to grant authority to the directors pursuant to section 80 of the Act to allot relevant securities (inter alia as consideration for the Acquisition); 5) to give power to the directors to allot certain relevant securities for cash free from pre-emption rights as if section 89 of the Act did not apply to such allotment; 6) to change the name of the Company to Quadrise Fuels International plc; and 7) to consolidate the Shares into New Shares. Resolutions (1) to (4) and (7) will be proposed as ordinary resolutions whileresolutions (5) and (6) will be proposed as special resolutions. As required bythe Panel, Resolution (2) will be decided on a poll. Resolutions (1) to (5) areconditions of the Acquisition and the Placing, which in each case will onlyproceed if all those Resolutions are carried. Taxation Certain general information relating to United Kingdom taxation with regards toAdmission is set out in paragraph 12 of Part VIII of the Admission Document. Ifyou are in any doubt as to your tax position, you should contact yourprofessional adviser immediately. Further information Your attention is drawn to the further information set out in the remainder ofthe Admission Document and, in particular, to the risk factors set out in PartIII of the Admission Document. Action to be taken You will find enclosed with the Admission Document two Forms of Proxy, for usein connection with the EGM and the Annual General Meeting. Whether or not youintend to be present at the EGM and/or the Annual General Meeting, you are askedto complete and return the two Forms of Proxy in accordance with theinstructions printed on them so as to be received by Share Registrars Limited,Craven House, West Street, Farnham, Surrey GU9 7EN as soon as possible but inany event not later than 4.00 p.m. on 16 April 2006. Completion and return ofthe Forms of Proxy will not preclude you from attending and voting at themeetings in person should you so wish. Recommendation and voting intentions The Existing Directors, who have been so advised by Smith & Williamson, believethat the Proposals are fair and reasonable and in the best interests of yourCompany and its Shareholders as a whole. In providing advice to the ExistingDirectors, Smith & Williamson has taken into account the Existing Directors' andthe Proposed Directors' commercial assessments. Accordingly, the Existing Board unanimously recommends that you vote in favourof the Resolutions to be proposed at the Extraordinary General Meeting as theExisting Directors and their connected persons have irrevocably undertaken to doin respect of their own beneficial holdings amounting in aggregate to 25,800,000Shares representing approximately 12.69 per cent. of the Existing Shares. Yours faithfullyBrian MoritzChairman INFORMATION ON QUADRISEBackground Quadrise is a subsidiary of Masefield Energy, a company formed in 2004 to holdthe non-trading asset based business interests of Masefield AG. The core business of Masefield AG is global trading of crude oil and refined oilproducts. Since inception in 1990, Masefield AG has expanded this business andestablished worldwide representation in major oil trading hubs withinternational activity serving a clientele which includes most of the recognisedparticipants in the global crude oil, gas and refined products markets.Masefield AG undertakes physical oil trades with private and state sector oilproducers, oil majors, independent traders, oil refiners, power generators andother consumers. Masefield AG has expert capability in risk management and theapplication of associated techniques in complex energy transactions involving,inter alia, the full range of derivative and forward market instruments. For theyear ended 30 June 2005, Masefield AG had turnover of $1,321,844,068, profitbefore tax of $1,021,212 and net assets of $23,734,863. In 2004, Masefield Energy formed an upstream (exploration and production) oilcompany, Nautical Holdings Limited, focused on the development of discoveredheavy oil reserves in the North Sea and Europe. In March 2005, Nautical HoldingsLimited was acquired by Bullion Resources Plc, an AIM quoted company, in areverse transaction. Bullion Resources Plc changed its name to NauticalPetroleum plc on completion of the reverse transaction. Masefield Energy also formed Quadrise to hold its worldwide downstream (oilprocessing and marketing) assets and interests. Quadrise holds a portfolio ofmanaged, affiliate and associate interests all of which are engaged indeveloping business activities associated with the manufacture and marketing ofQuadrise MSAR(R) fuels. The MSAR(R) fuels manufacturing process uses proprietaryAkzo Nobel residue emulsification technology. Quadrise has certain rights topromote and develop projects for the commercial application of the Akzo Nobelproprietary MSAR(R) technology in all countries other than Canada, the UnitedStates, Mexico, Japan and China. These rights are held under the AllianceAgreement, details of which are set out in paragraph 11.2.1(b) of Part VIII ofthe Admission Document. MSAR(R) Fuel Technology MSAR(R) fuel is a liquid fuel consisting of very fine oil particles dispersed in a water carrier. Heavy oil feedstock is processed into a water based emulsion fuel with oil particles of typically three to five micron size which is, effectively, a pre-atomised fuel. This enhances concepts previously used in emulsified fuels such as Orimulsion(R) as smaller sized, consistent oil particles maximise carbon burnout, improving thermal efficiency and reducing emissions. To produce MSAR(R) fuel, heavy oil feedstock is separated into high value lightoil (which can be sold back in the oil market) and low value residue. Thisresidue is processed in the MSAR(R) manufacturing unit, together with water andchemical emulsifiers to produce MSAR(R) fuel, an "oil in water" emulsion fuel. The MSAR(R) fuel is capable of being used in various combustion applications. The MSAR(R) fuel process substitutes water and emulsifiers for valuable lighteroil fractions which are normally added to dilute the distilled or cracked heavyresidue component of fuel oils. These lighter oil fractions can command a highervalue as blend components in conventional fuels such as diesel and kerosene. Theprocess, therefore can produce a lower cost substitute for conventional heavyfuel oils. Similarly, the process can also add value to heavy crude oils whichcan be separated through simple distillation into residues for MSAR(R) feedstockand higher value light crude, using a distillation unit. In the manufacture of MSAR(R) fuel, the heavy oil residue particles are typically milled to approximately 3 to 5 microns in size. Compared to ordinary atomised fuel oil droplets, an MSAR(R) droplet has a far greater surface area facilitating increased carbon burnout. The greater carbon burnout results in lower quantities of emissions. Thermal Power Plant Fuels The MSAR(R) processing technology enables the conversion of low value heavy oilresidues into emulsion fuels for use in thermal power generation and otherindustrial steam generation applications. MSAR(R) fuels may be used to replaceboth fuel oils and coal in thermal power generation and, particularly relativeto coal, offer significant environmental advantages associated with greenhousegas emissions. When substituted for coal, carbon dioxide emissions per kilowattof power generated are reduced by approximately 20 per cent. The Quadrise Directors believe that the cost reductions associated with usingMSAR(R) fuels may, in certain circumstances, restore the viability and extend the economic life of "brown field" oil fired steam cycle power plants while alsomaking it viable for power plant operators to invest in the plant required tomeet new emissions standards. Diesel Fuel Substitution MSAR(R) fuels are also suitable for use in diesel powered generators. Early trials with Rolls Royce produced very promising results and a fuel qualificationprogramme, coordinated by Quadrise Canada, is currently underway with a leadingmanufacturer of diesel fuelled power generator plants. Diesel based powergeneration developments tend to have short lead times and modular capacityexpansion. It is believed that a significant opportunity exists for re-fuellingexisting installed capacity. MSAR(R) Turbine Fuel Quadrise Limited, a wholly owned subsidiary of Quadrise, owns a patent relatingto the combustion of oil in water emulsion fuels in turbines. This requiresfurther application development work before it will be ready for general marketapplication. It is intended that this be undertaken by Quadrise in associationwith a major turbine manufacturer. The Quadrise Directors believe that the costadvantage of Quadrise MSAR(R) fuel, when compared with conventional turbine fuels, is likely to be considerable and potentially offers a further businessopportunity with considerable profit potential. Business of Quadrise The Quadrise vision is: "To be a profitable and growing business withrepresentation in major world markets, acknowledged to be the leading supplierof oil emulsion fuels for steam and power generation by 2010". The strategic focus of Quadrise is to develop the market for MSAR(R) fuels through the establishment of viable process locations and supply chain operations for major markets, the negotiation of long term supply contracts and joint ventures with key power utilities, all supported by a recognised specialist inhouse resource base being developed by Quadrise. Quadrise has certain rights to promote and develop projects for commercialapplication of the proprietary MSAR(R) process technology of Akzo Nobel in allcountries except the United States, Canada, Mexico, China and Japan under theAlliance Agreement. Further details of the Alliance Agreement are set out inparagraph 11.2.1(b) of Part VIII of the Admission Document. It it intended thatQuadrise will participate in the North American markets through its interests inQuadrise Canada and Quadrise US, further details of which are set out below. Quadrise has an in-house team of commercial and technical experts who havesignificant experience in the oil and energy business including thoseindividuals who first identified the MSAR(R) business opportunity. This team hasbuilt up the Quadrise portfolio of assets, rights, interests and prospects overseveral years. The Proposed Directors believe that there is opportunity formutual benefit within the portfolio as there is considerable synergy in basebusiness development and related commercial and technical support programmes. Quadrise Limited Quadrise Limited is a wholly owned subsidiary of Quadrise and is the registeredowner of the MSAR(R) trademark and of a patent relating to the combustion of oilin water emulsion fuels in turbines. Quadrise Power Systems AG Quadrise Power Systems AG is a wholly owned subsidiary of Quadrise and it isintended that it will be responsible for the development of the MSAR(R) fuelsbusiness in markets outside North America through business associations withjoint venture partners or direct contracts with fuel clients. In particular, itis intended that Quadrise will identify opportunities in developing economiesand Quadrise Power Systems AG will exploit these opportunities in associationwith local partners and government agencies, where appropriate. Quadrise Canada Quadrise Canada, in which Quadrise and Quadrise Limited have a combined 20.6 percent. equity interest, is a self managed associate company specialising in theapplication of the MSAR(R) fuels technology in the generation of steam and powerused in SAGD heavy oil production in Alberta. The production systems involvehorizontal wells and steam injection to heat the oil reservoirs. The MSAR(R)technology uses the produced heavy oil to produce a fuel for steam generation.The economics are considerably better than the current practice of using naturalgas for boiler fuel; the MSAR(R) fuel approach materially impacts the economics of oil production and the viability of new field development. Present indications are that the MSAR(R) technology can improve the internal rate of return of a typical SAGD project by in excess of 20 per cent.. Quadrise Canada has an agreement with Colt Technologies Inc. providing exclusiverights for North America for the emulsion manufacturing component of thepatented Colt Technologies Inc. combustion process. Quadrise Canada intends tobuild a portfolio of related intellectual property patents in association withseveral leading industry partners including ColtKBR and Paramount ResourcesLimited. With its exclusive rights to Akzo Nobel's MSAR(R) technology in Canada combinedwith the major growth market of SAGD oil operations, the Quadrise Directorsbelieve that Quadrise Canada has considerable business potential. In December2005, Quadrise Canada completed a C$32 million financing and has advisedshareholders and investors of its intention to provide liquidity, possiblythrough a listing on a recognised investment exchange by mid 2007. In additionto their combined 20.6 per cent. equity interest, Quadrise and Quadrise Limitedbetween them also have the right to a combined royalty of 6.67 per cent. of thenet (before tax) income of Quadrise Canada. Quadrise US Quadrise US is a business in formation which is intended to have certain rightsto the manufacture and marketing of MSAR(R) fuels for supply to the thermal power generation market in the United States and Mexico. The formation of Quadrise US is the subject of a non-binding memorandum of understanding ("MOU") entered into on 1 November 2005, further details of which are given in paragraph 11.2.1(c) of Part VIII of the Admission Document. Assuming that legally binding arrangements are concluded in line with the terms recorded in the MOU, Quadrise will have the right to a 49.7 per cent. interest in Quadrise US, Quadrise America Inc. (a wholly owned subsidiary of Quadrise Canada) will have 29.7 per cent. and a US based partner will have a 19.7 per cent. entitlement with the obligation to provide US$1 million seed financing as well as to raise further funding as required. (Effectively Quadrise will hold a further 6 per cent. indirectly through its share of Quadrise Canada and thus it will potentially have a majority interest in the US business). Marketing and Operations The Quadrise Directors believe that it is possible to progress from a smallscale single separator and processor configuration, which could be located on asingle power plant site, to a substantial process plant manufacturing operationsupplying MSAR(R) fuels to several clients. The first strategic marketing priority is the establishment of process sites to be used as MSAR(R) production facilities and technology reference plants. These process sites will be limited in scale and used to supply MSAR(R) fuel to client's power plants as a precursor to (or instead of) future supply from larger scale, more centralised manufacturing facilities. Figure 9 illustrates the supply chain for a larger manufacturing facility. The marketing focus will be on oil fired thermal power stations with fuel costand emissions compliance difficulties, as well as consumers of Orimulsion(R). A further early focus will involve the identification of suitable local businessassociates for prospective high potential markets (such as India) and creationof related joint ventures to accelerate business development. In respect of the process sites, Quadrise will evaluate the potential of anumber of location options taking into consideration feedstock and MSAR(R) product shipping costs, the extent of existing utility and tankage facilities, the availability of feedstock and MSAR(R) product transfer facilities, as well as the availability of local support for the operation and maintenance of theproduction plant. Local regulatory and environmental issues will also beconsidered. The actual design and construction of the facilities are intended to be carriedout substantially on a turnkey contract basis by SNC Lavalin UK Limited, whowill provide an overall integrated design on a project by project basis and whowill also manage the operation and maintenance of the production plants.Quadrise has entered into a frame agreement with SNC Lavalin UK Limited to takeadvantage of its expertise in the design and construction of hydrocarbonprocessing facilities. Further details of this contract are set out in paragraph11.2.1(a) of Part VIII of the Admission Document. To date, Quadrise has conducted successful burn trials at 3 power plants locatedin the UK and Europe. Discussions on the supply of MSAR(R) fuel to those andassociated power plants are in hand, as are discussions on supply to a furtherpower plant in South East Asia. Negotiations are also currently in progress toestablish process sites in three European or Middle Eastern locations forcentral processing and onward distribution of MSAR(R) fuels to the power plantclient base. Quadrise Canada has completed an extensive programme of burn trials at thefacilities of CANMET, testing samples for several bitumen emulsions whichignited and burned well in the research tunnel furnace. The results led to apilot plant trial, completed in December 2005, on a Deer Creek oil fielddevelopment site. Several major Canadian oil production companies supported thepilot project in order to assess the experience and findings. Recent Trends and Prospects The first emulsified fuel available to worldwide markets was Orimulsion(R)supplied using process technology developed by Petroleos de Venezuela inpartnership with British Petroleum in Venezuela in the 1980s. Orimulsion(R) hasbeen used worldwide as a fuel for thermal power generation with annualconsumption typically exceeding 100,000 barrels per day. For the past decadeconsumption was effectively limited by Orimulsion(R) production capacity. Quadrise MSAR(R) fuels offer several advantages over Orimulsion(R). Orimulsion(R) is a single source product based on a single feedstock, Orinoco Bitumen. MSAR(R), by contrast, can be produced using feedstock from a variety of sources and with differing characteristics, specifications and quality. This allows flexible, multiple sourcing and the opportunity to manufacture locally on a client's site. In addition, the MSAR(R) process is able to achieve smaller average residue particle sizes and thereby assure superior carbon burnout. These advantages are commercially significant given worldwide government pressure to reduce pollutant emissions, particularly from power plants. OECD data shows global oil use in power generation to be equivalent to over 400million tonnes of MSAR(R) per annum. This represents a substantial businessopportunity for the conversion of thermal power plants to MSAR(R). In addition,there have been uncertainties recently on the future availability of supplies ofOrimulsion(R) which the Proposed Directors believe are due to arrangements between Chinese interests and Petroleos de Venezuela which are likely to result in those Chinese interests having a preferred call on the available fuel. Thesedevelopments have already led to the reduction or termination of Orimulsion(R)fuels supplies to major users and result in significant potential for themanufacture and marketing of MSAR(R) fuels to supply former Orimulsion(R) clientele. There is a worldwide trend towards the production of heavier crude oil and froman economic perspective, MSAR(R) provides a simple value-enhancement option forsuch crudes. Splitting these crude oils allows Quadrise to utilise the residueas low cost feedstock for its MSAR(R) fuel sales. Further, Quadrise can then sell the higher value light oil content into the refining market as a premiumrefining feed with very low residue content. This is particularly important witha worldwide trend towards heavier average produced crude barrels, and greatermarket demand for the lighter distillate barrels required for transportationfuels. This also tends to underpin the prospects for light to heavy oil valuespreads which generally favour the MSAR(R) business. The Proposed Directors believe that many developing economies would benefit fromthe recovery of light oils to contribute to their transportation fuel pools.This would either reduce the importation of finished light fuel products orprovide an availability of high value fuels for export. Quadrise intends toidentify and exploit these opportunities in association with local partners andgovernment agencies, where appropriate. A focus of technology development in the power generation field concernsemissions reduction and thermal efficiency. MSAR(R) fuels hold significant promise in both respects, not only from re-fuelling and supply of 'customised' low sulphur fuels, but also in co-firing or over-firing in coal fuelled plants for flame stabilisation and emissions mitigation. MSAR(R) achieves significantly lower carbon oxides and particulate emissions than coal and lower nitrogen oxideemissions than both coal and commercial fuel oils. Research studies undertaken by Quadrise experts have also illustrated that MSAR(R) turbine fuels could, in future, provide an environmentally friendly basis for 're-powering' of both oil and coal fuelled brown-field power plants. The Quadrise Directors believe that MSAR(R) turbine fuels have the potential toimprove efficiency and commercial returns while ensuring compliance with futureemissions standards. RISK FACTORS In addition to the other relevant information set out in the Admission Document,the following specific factors should be considered carefully in evaluatingwhether to make an investment in the Company or whether to approve theAcquisition at the EGM. An investment in the Company may not be suitable for allrecipients of the Admission Document. If you are in any doubt about the action you should take, you should consult aperson authorised under FSMA if you are resident in the United Kingdom or, ifyou are not resident in the United Kingdom, an appropriate independent adviserwho specialises in advising on the acquisition of shares and other securities. A prospective investor ought not to infer any relative importance in relation tothe risk factors by reference to the order in which they appear. It should benoted that the risks described below are not the only risks faced by theCompany. There may be additional risks that the Existing Directors and theProposed Directors currently consider not to be material or of which they areunaware. The information below does not purport to be an exhaustive list orsummary of the risks affecting the Enlarged Group. Shareholders and investorsshould consider carefully whether they wish to approve the Acquisition orwhether an investment in the Company is suitable for them, in light of thematters referred to in the Admission Document, their personal circumstances andthe financial resources available to them. Market risk The marketability of MSAR(R) fuels will be affected by numerous factors beyond the control of the Enlarged Group. These factors include variability of pricespreads between light and heavy oils, oil, gas and electricity prices both forprompt and future delivery, and the associated cost and availability of heavyoil and residue feedstocks, and realisations for light fractions traded out inthe fuels markets. Commercial risks There is a risk the Enlarged Group will not achieve a commercial return due tomajor unanticipated change in a key variable or, more likely, the aggregateimpact of changes to several variables which results in sustained depressedmargins. The competitive position could be affected by changes to government regulationsconcerning taxation, duties, specifications, importation and exportation ofhydrocarbon fuels and environmental aspects. Freight costs contributesubstantially to final cost of supplied products and a major change in the costof bulk liquids freight markets could have an adverse effect on the economics ofthe fuels business. Alliance Agreement The Alliance Agreement from which Quadrise derives a substantial part of itsrights to promote and develop projects for the commercial application of theMSAR(R) oil process technology of Akzo Nobel is capable of being terminated byeither Quadrise or Akzo Nobel on 12 months' notice at any time after 20 December2009. While the Proposed Directors believe that it is likely to be in the commercialbest interests of Akzo Nobel to allow the Alliance Agreement to continue after20 December 2009, there can be no guarantee that this will occur. In addition, under the Alliance Agreement, the terms of the licence granted byAkzo Nobel and the supply of the relevant system by Akzo Nobel are to be agreedon a case by case basis in relation to each project. Shareholders' attention isdrawn to the summary of the Alliance Agreement detailed in paragraph 11.2.1(b)of Part VIII of the Admission Document. Competition risks There is a risk that new competition could emerge with similar technologies butsufficiently differentiated to challenge the Akzo Nobel patent protection forthe MSAR(R) oil process technology. This could result, over time, in further price competition and a pressure on margins beyond that assumed in the Company'sbusiness planning. Joint venture parties and contractors The Proposed Directors are unable to predict the risk of financial failure ornon compliance with respective obligations or default by a participant in anyjoint venture in which the Enlarged Group is, or may become a party; insolvencyor other managerial failure by any of the contractors used by the Enlarged Groupin its fuel processing and distribution activities; or insolvency or othermanagerial failure by any of the other service providers used by the EnlargedGroup for any activity. Dependence on key personnel The Enlarged Group's business is dependent on retaining and obtaining theservices of a small number of key personnel of the appropriate calibre as thebusiness develops. The success of the Enlarged Group is, and will continue to beto a significant extent dependent on the expertise and experience of theProposed Directors, management and consultants and the loss of one or more couldhave a materially adverse effect on the Enlarged Group. Insurance risks The Company plans to insure its operations in accordance with industry practiceand plans to insure the risks it considers appropriate for the Enlarged Group'sneeds and for its circumstances. Insurance cover will not be available for everyrisk faced by the Enlarged Group. Although the Enlarged Group believes that it or the operator of the relevantplant should carry adequate insurance with respect to its operations inaccordance with industry practice, in certain circumstances the Enlarged Group'sor the operator's insurance may not cover or be adequate to cover theconsequences of such events. In addition the Enlarged Group may be subject toliability for pollution, or other hazards against which the Enlarged Group orthe outsourced service operator may elect not to insure because of high premiumcosts or other reasons. The occurrence of an event that is not covered or fullycovered by insurance could have a material adverse effect on the business,financial condition and results of operations of the Enlarged Group. There is a risk that insurance premiums may increase to a level where theEnlarged Group considers it is unreasonable or not in its interests to maintaininsurance cover or not to a level of coverage which is in accordance withindustry practice. In addition, the Enlarged Group may, following a cost-benefitanalysis, elect to not insure certain risks on the ground that the amount ofpremium payable for that risk is excessive when compared to the potentialbenefit to the Enlarged Group of the insurance cover. Environmental risks The Enlarged Group's operations are subject to the environmental risks inherentin the oil processing and distribution industry. The Enlarged Group will besubject to environmental laws and regulations in connection with all of itsoperations. Although the Enlarged Group intends to ensure compliance in allmaterial respects with all applicable environmental laws and regulations, thereare certain risks inherent to its activities, such as accidental spills,leakages or other circumstances, that could subject the Enlarged Group toextensive liability. Further, the Enlarged Group may require approval from the relevant authoritiesbefore it can undertake activities which are likely to impact the environment.Failure to obtain such approvals will prevent or delay the Enlarged Group fromundertaking its desired activities. The Enlarged Group is unable to predictdefinitively the effect of additional environmental laws and regulations whichmay be adopted in the future, including whether any such laws or regulationswould materially increase the Enlarged Group's cost of doing business or affectits operations in any area. Currency risk The Enlarged Group will report its financial results in Sterling, while manycontracts in the oil and gas industry are principally denominated in UnitedStates dollars. Fluctuations in exchange rates between currencies in which theEnlarged Group operates may cause fluctuations in its financial results and mayhave an adverse effect on income and/or asset values. No profit to date The Enlarged Group has incurred aggregate losses since its inception and it istherefore not possible to evaluate its prospects based on past performance.Since the Enlarged Group intends to continue investing in the various projectsit currently holds an interest in, the Proposed Directors anticipate makingfurther losses for the financial period ending 31 March 2007. There can be nocertainty that the Enlarged Group will achieve or sustain profitability orachieve or sustain positive cash flow from its activities. Future funding requirements The Enlarged Group may need to raise additional funding to undertake work beyondthat capable of being funded by its existing cash resources. There is nocertainty that this will be possible at all or on acceptable terms. Affiliatesand associates, such as Quadrise Canada and/or other entities which are notmajority controlled by the Enlarged Group, may decide to raise external fundingand this may lead to a reduction in the Enlarged Group's interest in, and hencethe level of control it exercises over such affiliates and associates. Corporate and regulatory formalities The conduct of petroleum processing and distribution require compliance by theEnlarged Group with numerous procedures and formalities in many differentnational jurisdictions. It may not in all cases be possible to comply with orobtain waivers of all such formalities and it may not therefore be possible tooperate in certain jurisdictions. Volatility of prices of oil and gas The demand for, and price of, oil and gas is highly dependent on a variety offactors including international supply and demand, the level of consumer productdemand, weather conditions, the price and availability of alternative fuels,actions taken by governments and international cartels, and global economic andpolitical developments. International oil prices have fluctuated widely inrecent years and may continue to fluctuate significantly in the future. TheEnlarged Group will be substantially reliant on the value spread between lightand heavy oil products. It is also affected by inter-fuels competition and therelative prices of oil, coal and gas when used as steam raising and powergeneration fuels. Fluctuations in oil and gas prices and, in particular, amaterial change to relative prices may have a material adverse effect on theEnlarged Group's business and financial condition. Economic, political, judicial, administrative, taxation or other regulatoryfactors The Enlarged Group may be adversely affected by changes in economic, political,judicial, administrative, taxation or other regulatory factors, in the areas inwhich the Enlarged Group will operate and conduct its principal activities. Share price volatility and trading basis The Shares are not listed on the Official List and although the Shares or,following Consolidation, New Shares are to be traded on AIM, this should not betaken as implying that there will be a liquid market in the Shares or, followingConsolidation, New Shares. A return on investment in the Shares or, followingConsolidation, New Shares may, therefore, in certain circumstances be difficultto realise. The price at which the Shares or, following consolidation, NewShares may trade and the price which Shareholders may realise for their Sharesor, following Consolidation, New Shares will be influenced by a large number offactors, some specific to the Company and some which may affect quoted companiesgenerally. These factors could include the performance of the Enlarged Group'soperations, large purchases or sales of Shares or, following Consolidation, NewShares, liquidity (or absence of liquidity) in the Shares or, followingConsolidation, New Shares, currency fluctuations, legislative or regulatorychanges and general economic conditions. The value of the Shares or, followingConsolidation, New Shares is liable therefore to fluctuate and may not reflectthe underlying asset value of the Enlarged Group. Application will be made for the Enlarged Share Capital to be admitted totrading on AIM. AIM is a market designed primarily for emerging or smallercompanies. The rules of this market are less demanding than those of theOfficial List. Neither London Stock Exchange nor the UK Listing Authority hasitself examined the Admission Document for the purposes of Admission. Investment risk Shareholders should be aware that the value of an investment in the EnlargedGroup may go down as well as up. In addition, there can be no certainty that themarket value of an investment in the Enlarged Group will fully reflect theunderlying value of the Enlarged Group. Taxation Any change in the Enlarged Group's tax status or the tax applicable to holdingShares or, following Consolidation, New Shares or in taxation legislation or itsinterpretation, could affect the value of the investments held by the EnlargedGroup, affect the Enlarged Group's ability to provide returns to Shareholdersand/or alter the post-tax returns to Shareholders. Statements in the AdmissionDocument concerning the taxation of the Company and its investors are based uponcurrent UK tax law and practice which is subject to change. DEFINITIONS The following definitions shall apply throughout the Admission Document and thisannouncement unless the context otherwise requires: "Acquisition" the proposed acquisition of Quadrise from the Vendors by the Company "Acquisition the agreement dated 22 March 2006 between Zareba and theAgreement" Vendors, details of which are given in paragraph 11.1(a) of Part VIII of the Admission Document "Act" the Companies Act 1985, as amended "Admission" the admission of the Enlarged Share Capital to trading on AIM becoming effective in accordance with the AIM Rules "AIM" the AIM market operated by London Stock Exchange "AIM Rules" the AIM Rules for companies, published by the London Stock Exchange "Akzo Nobel" Akzo Nobel Surface Chemistry AB "alliance the alliance agreement between Akzo Nobel and MasefieldAgreement" Energy dated 20 December 2004 and assigned to Quadrise on 2 December 2005, details of which are set out in paragraph 11.2.1(b) of Part VIII of the Admission Document "Annual General the annual general meeting of the Company convened for 4.00pmMeeting" or on 18 April 2006 or any adjournment thereof, a notice of"AGM" which is set out on page 143 of the Admission Document "Board" or the existing directors of the Company, whose names are set"Existing out on page 4 of the Admission DocumentDirectors" "C$" Canadian Dollars "CANMET" the CANMET Energy Technology Centre - Ottawa, a research arm of Natural Resources Canada, a Canadian federal government department "City Code" The City Code on Takeovers and Mergers "ColtKBR" a joint venture between Colt Engineering Corporation and KBR (Kellogg Brown and Root), the engineering and construction division of Halliburton Company of Houston, Texas "Company" or Zareba plc, a company incorporated under the laws of England"Zareba" and Wales, with Registered No. 5267512 "Concert Party" those Vendors assumed to be acting in concert whose names are set out in paragraph 9 of Part VIII of the Admission Document "Consideration the 3,758,271,417 Shares, or following Consolidation, theShares" 375,827,136 New Shares to be allotted to the Vendors on completion of the Acquisition "CREST" the computerised system for trading securities in uncertificated form in the UK operated by CRESTCo Limited "Directors" the Existing Directors and the Proposed Directors "Enlarged Group" the Company and its subsidiary undertakings as enlarged by the Acquisition "Enlarged Share the issued share capital of the Company at AdmissionCapital" comprising the Existing Shares, the Consideration Shares, the Initial Placing Shares and the Placing Shares "Existing the existing 203,300,000 Shares in issue as at the date ofShares" the Admission Document "Existing holders of Existing SharesShareholders" "Extraordinary the extraordinary general meeting of the company convened forGeneral Meeting" 3.00pm on 18 April 2006, or any adjournment thereof, a noticeor "EGM" of which accompanies the Admission Document "Forms of Proxy" the form of proxy accompanying the Admission Document to be used by Shareholders in respect of the EGM and the AGM, as appropriate "FSA" the Financial Services Authority "FSMA" the Financial Services and Markets Act 2000 "Group" the Company and its subsidiaries from time to time "Hichens" Hichens, Harrison & Co. plc "Initial the conditional placing of the Initial Placing SharesPlacing" "Initial Placing 1.75p per Share or on Consolidation, 17.5p per New SharePrice" "Initial Placing 14,285,713 Shares or, on Consolidation 1,428,571 New SharesShares" to be issued pursuant to the Initial Placing "London Stock London Stock Exchange plcExchange" "Masefield AG" Masefield AG, a company incorporated under the laws of Switzerland with Registered No. CH-170.3.012.268-7 "Masefield Masefield Energy Holdings AG, a company incorporated underEnergy" the laws of Switzerland with Registered No. CH-170.3.012.268-7 "Masefield Energy the directors of Masefield Energy namely James LaurenceDirectors" Daley, Philippe Jaceard and Peter Biberstein, all of Baarerstrasse 69, CH6300 Zug, Switzerland "Masefield Masefield Energy and its subsidiariesGroup" "Minority certain minority shareholders who, together, own or areShareholders" entitled to approximately 27.5 per cent. of the issued share capital of Quadrise "N$" Namibian Dollars "NEC Option A" a preformatted turnkey engineering and construction contact developed under the auspices of the Institution of Civil Engineers and widely adopted for capital projects "New Board" or the proposed directors of the Company following Admission"Proposed whose names are set out on page 4 of the Admission DocumentDirectors" "New Shares" ordinary share of 1p each in the capital of the Company following the Consolidation "Notice of EGM" notice of EGM set out on pages 141 and 142 of the Admission Document "OECD" Organisation for Economic Co-operation and Development "Official List" the Official List of the UK Listing Authority "Panel" the Panel on Takeovers and Mergers "Placee" a person who has conditionally agreed to subscribe for Placing Shares under the Placing "Placing" the conditional placing of the Placing Shares at the Placing Price on the terms set out in the Placing Agreement "Placing the agreement dated 22 March 2006, between Zareba, HichensAgreement" and Smith & Williamson relating to the Placing described in paragraph 11.1(d) of Part VIII of the Admission Document "Placing Price" 2p per Share or, on Consolidation, 20p per New Share "Placing Shares" 633,411,500 Shares or, following Consolidation, 63,341,150 New Shares, to be issued pursuant to the Placing "Preliminary the agreement dated 18 November 2005 between the Company andMerger Masefield Energy Pursuant to which the Company conditionallyAgreement" agreed to acquire the issued share capital of Quadrise "Proposals" the Acquisition, Placing, Waiver and Admission "Quadrise" Quadrise International Limited, a company incorporated under the laws of England and Wales, with Registered No. 02507321 "Quadrise Quadrise Canada Fuels Systems Inc, a company incorporatedCanada" under the laws of Canada, with Registered No. 2010469373 "Quadrise Hemant Thanawala, Ian Williams, Tony Kallis and Bill HoweDirectors" "Quadrise Group" Quadrise and its subsidiaries, affiliates and associated companies including Quadrise Canada "Quadrise Power Quadrise Power Systems AG, a company incorporated under theSystems AG" laws of Switzerland, with Registered no. CH-170.3.026.181-7 "Quadrise ordinary shares of 1p each in the capital of QuadriseShares" "Quadrise US" Quadrise Fuels UK LP, a proposed limited partnership, to be established in Delaware, USA "Resolutions" the resolutions set out in the Notice of EGM "Shareholders" holders of Shares, or, following Consolidation, New Shares "Smith & Smith & Williamson Corporate Finance LimitedWilliamson" "UK Listing the FSA, in its capacity as the competent authority for theAuthority" purposes of the admission of securities to the Official List "United States" the United States of America (including any state of the United States of America and the District of Columbia), its possessions and territories, and all other areas subject to its jurisdiction "US Person" a US person as defined in the Regulation S under the United States Securities Act of 1933 (as amended) "Vendors" Masefield Energy, the holder of approximately 72.5 per cent. of the issued share capital of Quadrise, together with the Minority Shareholders "Waiver" the waiver by the Panel of the obligation of the Concert Party to make a general offer under Rule 9 of the City Code GLOSSARY The following technical terms are used in the Admission Document and thisannouncement: Bpd barrels per day Burn trial an event where fuel is burnt in a test of full boiler environment as part of a trial Cracked fuel the residue portion derived from the catalytic or thermal crackingoil process of a fuel MSAR(R) a registered trademark belonging to Quadrise Limited which stands for Multi-phase Superfine Atomised Residue, and is the trade name applied to liquid fuel, produced using the process proprietary to Akzo Nobel, consisting of very fine oil droplets dispersed in a water carrier Orimulsion(R) a registered trademark belonging to Bitumenes Orinoco, S.A a wholly owned subsidiary of Petroleos de Venezuela S.A. It is the name applied to an emulsified liquid fossil fuel produced from natural bitumen which ahs been extensively utilised on a commercial scale by power utilities and in the industrial sector Pre-atomised a fuel in which the oil droplets in the oil in water emulsion arefuel of such small diameter that the oil content of the fuel is effectively in an atomised condition prior to reaching in burner in the combustion process SAGD Steam Assisted Gravity Drainage, a technology for separating and producing oil and/or bitumen from oil/tar sands and heavy oil deposits using steam This information is provided by RNS The company news service from the London Stock Exchange

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