7th Aug 2008 15:23
Emerald Energy Plc
For immediate release
7 August 2008
Extraordinary General Meeting
Emerald Energy Plc ("Emerald" or the "Company") is today convening an Extraordinary General Meeting of its shareholders to be held on 26 August 2008 (the "EGM"). The purpose of the EGM is:
To give the directors an authority, in addition to the authority granted at annual general meeting of shareholders held on 15 May 2008, to issue and allot ordinary shares that the Company will be required to issue and allot in the event of conversion of convertible bonds issued by the Company in July 2007.
The directors intend to use the authority to extend the exercise period of certain options to have sufficient time to seek a whitewash required in the current circumstances by the Takeover Code. As was disclosed in the prospectus published by the Company in July 2003, three of the directors, Alastair Beardsall, Edward Grace and Fred Ponsonby are deemed by the Panel on Takeovers and Mergers to be in concert with Waterford Finance & Investment Limited, who currently holds 30.92 per cent of the issued share capital of the Company. Subsequently, Alastair Beardsall, Edward Grace and Fred Ponsonby are prevented from acquiring shares of the Company without triggering a mandatory offer by the concert party. The directors strongly prefer to hold an equity interest in the Company in order to better align their interests with those of the Company's shareholders.
Granting the directors a specific authority to issue and allot ordinary shares of the Company that may be required in the event of conversion of the bonds issued by the Company in July 2007, will provide the Company with greater flexibility that it may require until the bonds reach their final maturity on 15 January 2013.
Further information regarding the resolutions (the "Resolutions") to be proposed at the EGM (the "Proposals") and the reasons why the directors support the Proposals are provided below.
Reasons for amendments to Emerald Energy Plc Discretionary Share Option Scheme
During August and September 2003, Waterford Finance & Investment Limited ("Waterford") subscribed for ordinary shares in the capital of the Company representing 44.91 per cent of the Company's then issued share capital (the "2003 Transactions").
In accordance with Rule 9 of the Takeover Code ("Rule 9") and except with the consent of the Panel on Takeovers and Mergers (the "Panel"), when:
any person acquires, whether by a series of transactions over a period of time or not, an interest in shares which (taken together with shares in which persons acting in concert with him are interested) carry 30 per cent or more of the voting rights of a company; or
that person or persons acting in concert will be required to make a mandatory offer to purchase the balance of the issued share capital of that class of shares.
At the time of the 2003 Transactions, the Panel waived the obligation on Waterford to make mandatory offer under Rule 9 and the waiver was approved by Shareholders at an extraordinary general meeting held on 15 August 2003. The 2003 Transactions were set out in full in a prospectus issued by the Company on 18 July 2003. Waterford currently holds 30.93 per cent of the issued share capital of the Company.
At the time, the Panel deemed that three of the current directors, Alastair Beardsall, Edward Grace and Fred Ponsonby (the "Relevant Directors") were acting in concert with Waterford.
The Relevant Directors currently hold options exercisable over 2,350,000 ordinary shares of 10 pence each in the capital of the Company ("Ordinary Shares") granted under the rules of the Emerald Energy Plc Discretionary Share Option Scheme (the "Scheme"). The issue of these options was not approved by a vote of the independent shareholders pursuant to a Whitewash resolution as required by note 10 under Rule 9.
The exercise period for 1,450,000 of these options ("Relevant Options") expires on 27 August 2008. Of the Relevant Options, 1,000,000 are held by Alastair Beardsall, 300,000 are held by Edward Grace and 150,000 are held by Fred Ponsonby, all of whom would like to exercise these options in full. If they do so and the Panel deems that they are still acting in concert with Waterford, the aggregate percentage shareholding of the Relevant Directors and Waterford would increase to a level that would trigger a requirement on the Relevant Directors and Waterford (the "Concert Party") to make a mandatory offer under Rule 9.
In these exceptional circumstances, the Panel has agreed that the Company may seek a retrospective Rule 9 Waiver (the "Whitewash") to allow the Relevant Directors to subscribe for Ordinary Shares on exercise of the Relevant Options without triggering the obligation under Rule 9 to make a mandatory offer.
As there is insufficient time prior to the end of the exercise period to prepare a Whitewash Circular, the Company intends to consult with and obtain the approval of the Panel and subsequently convene a General Meeting of Shareholders to seek approval of the Whitewash. Prior to doing this, the directors wish to seek the approval of Shareholders to amend the rules of the Scheme to allow the directors to extend the exercise period of options granted under the Scheme in circumstances when the exercise of options at any time before the expiry of any relevant exercise period would be prevented by law or the rules of any securities exchange or regulatory or governmental body, if the exercise of options at any time before the expiry of any relevant exercise period would trigger an obligation to make a mandatory offer under Rule 9 or in any other circumstances where the directors consider it fair and reasonable to extend the relevant exercise period. If Shareholders approve this amendment, the directors intend to extend the exercise period of all unexercised options expiring on 27 August 2008, including the Relevant Options, by one year. The directors believe this extension will provide sufficient time to implement the Whitewash, which would cover all options held by the Relevant Directors under the Scheme. The Company intends to seek approval of Shareholders to the Whitewash not later than its next Annual General Meeting, provided that the Concert Party still holds and will hold after the exercise of the Relevant Options more than 30 per cent of the issued share capital of the Company.
In the event that the exercise period of the Relevant Options is not extended, the Relevant Directors would have no choice but to take advantage of a recent amendment to the Scheme entitling participants, in certain circumstances, to receive on exercise of their share options, cash in lieu of Ordinary Shares, requiring the Company to utilise in excess of £6 million of its cash reserves.
THE RELEVANT DIRECTORS, HOWEVER, WOULD STRONGLY PREFER TO HAVE AN EQUITY INTEREST IN THE COMPANY IN ORDER TO ALIGN THEIR INTERESTS TO THOSE OF SHAREHOLDERS.
Directors' Authority to Allot Ordinary Shares
At this year's annual general meeting held on 15 May 2008, Shareholders gave directors authority to allot 5,959,300 Ordinary Shares, representing 10 per cent of the then issued share capital. As announced on 4 July 2007, the Company issued convertible bonds to a value of US$30 million (the "Bonds"). The Bonds can be converted at any time until January 2012, in the case of US$15 million of the Bonds and January 2013 in the case of US$15 million of the Bonds, and if fully converted would oblige the Company to allot 5,318,511 Ordinary Shares. As a result, only 640,789 Ordinary Shares authorised to be allotted on 15 May 2008 are available to the directors to allot.
It is therefore proposed to seek, in addition to the authority granted on 15 May 2008, a separate authority to allot Ordinary Shares on conversion of the Bonds, leaving the directors free to utilise the authority granted on 15 May 2008. If passed, this resolution would entitle directors to allot an additional 5,318,511 Ordinary Shares representing 8.91 per cent of the issued share capital of the Company as at the close of business on 6 August 2008. The directors will be permitted to exercise this authority if the Bonds are converted in full or in part. The authority will lapse on the earlier of the date the Bonds are fully redeemed or converted or on 16 January 2013.
In the event this resolution is not passed, the directors would, if any of the Bonds are converted, use the authority granted on 15 May 2008 to allot shares on conversion of the Bonds.
Notice of Extraordinary General Meeting
NOTICE IS HEREBY GIVEN that an Extraordinary General Meeting of Emerald Energy Plc will be held at the offices of Memery Crystal LLP, 44 Southampton Buildings, London WC2A 1AP on Tuesday, 26 August 2008, at 11 a.m. to consider, and if thought fit pass, the following two resolutions:
Ordinary Resolutions:
1. THAT rule 4.2 of Emerald Energy Plc Discretionary Share Option Scheme (the "Scheme") be amended by adding the following:
"The directors may extend the exercise period of any options granted under the Scheme ("Options") in circumstances where the exercise of the Options at any time before the expiry of any relevant exercise period would otherwise be prevented by law or the rules of any securities exchange or governmental body, including the Panel on Takeovers and Mergers (the "Panel"), the London Stock Exchange or the Financial Services Authority, in the event the exercise of the Options at any time before the expiry of any relevant exercise period would trigger an obligation to make a mandatory offer under Rule 9 of the Takeover Code or in any other circumstances where the directors consider it fair and reasonable to extend the relevant exercise period."
2. THAT the directors be and they are hereby unconditionally authorised, in addition to the authority granted on 15 May 2008, to exercise all powers of the Company to allot ordinary shares in the capital of the Company of whatever denomination in the event that all or part of the Series A US$15 million Senior Unsecured Convertible Bonds due 2012 or Series B US$15 million Senior Unsecured Convertible Bonds due 2013 (the "Bonds") are converted into shares in the capital of the Company, such authority to commence on the passing of this resolution and to expire on the date that the Bonds become fully redeemed or converted.
By Order of the Board
Richard Konn
Company Secretary
7 August 2008
Notes:
Pursuant to Regulation 22 of the Isle of Man Uncertificated Securities Regulations 2005, the Company specifies that only those members registered on the Company's register of members at 11 a.m. on 24 August 2008 shall be entitled to attend and vote at the Meeting.
If you are a member of the Company at the time set out in note 1 above, you are entitled to appoint a proxy to exercise all or any of your rights to attend and vote at the Meeting and you should have received a proxy form with this notice of meeting. You can only appoint a proxy using the procedures set out in these notes and the notes to the proxy form.
A proxy does not need to be a member of the Company but must attend the Meeting to represent you. Details of how to appoint the Chairman of the Meeting or another person as your proxy using the proxy form are set out in the notes to the proxy form.
You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. You may not appoint more than one proxy to exercise rights attached to any one share. To appoint more than one proxy, please contact the Company's registrars at the address set out in note 5.
The notes to the proxy form explain how to direct your proxy how to vote on each resolution or withhold their vote. To appoint a proxy using the proxy form, the form must be completed and signed and received by Capita Registrars, Proxy Department, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, no later than 11 a.m. on 24 August 2008. In the case of a member which is a company, the proxy form must be executed under its common seal or signed on its behalf by an officer of the company or an attorney for the company. Any power of attorney or any other authority under which the proxy form is signed (or a duly certified copy of such power or authority) must be included with the proxy form.
In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the Company's register of members in respect of the joint holding (the first-named being the most senior).
As at 5 p.m. on the day immediately prior to the date of posting of this notice of Extraordinary General Meeting, the Company's issued share capital comprised 59,666,793 ordinary shares of 10p each. Each ordinary share carries the right to one vote at a General Meeting of the Company and, therefore, the total number of voting rights in the Company as at 5 p.m. on the day immediately prior to the date of posting of this notice of Extraordinary General Meeting is 59,666,793.
Full text of the Circular sent out to Shareholders can be found on the Company's website: www.emeraldenergy.com
Enquiries: Lisa Hibberd 020 7925 2440
Related Shares:
Emerald Energy