Issue of Loan Notes and Marketing Agreement

IPSA Group PLC

("IPSA" or "the Company")

Issue of Loan Notes and Agreement with Standard Bank and TurboCare

Highlights

·; Loan Notes to provide £650,000 interim funding

·; Tripartite agency agreement to advance sale of gas turbines

·; New standstill arrangements with the Company's major creditors

IPSA PLC (AIM: IPSA), the developer, owner and operator of power generation capacity in Southern Africa, announces that on 5 March 2010 the Company entered into an agreement with RAB Energy Fund Limited and certain other investors (together the "Loan Note Holders") to issue £650,000 of unsecured loan notes (the "Loan Notes") to the Loan Note Holders. 

On the same day, the Company also entered into an agreement with Standard Bank PLC ("Standard Bank") and TurboCare S.p.A. ("TurboCare") regarding the marketing of the Company's gas turbines, which also provides a standstill arrangement regarding funds due to both these parties.

TERMS OF THE LOAN NOTES

Under the terms of the agreement, the Company will issue £650,000 of unsecured loan notes of £1 each, which carry interest of 6% per annum, and which are due for repayment (the "Repayment Date"), together with accrued interest thereon, on the earlier of:

·; 31 January 2011; or

·; A change of control of the Company; or

·; The sale of two of the Siemens Westinghouse 701 DU turbines ("the Turbines") (including the Turbine already conditionally sold to IPC as announced on 23 December 2009); or

·; A full or partial sale of certain other plant or equipment in South Africa (or otherwise generating proceeds in respect of such operations) for at least US$ 8 million.

In accordance with the agreement, the Company intends that the proceeds from issuing the Loan Notes will be applied for the purposes of the development of the Elitheni coal project at Indwe, South Africa, and for general operational and working capital purposes.

In addition, the Company has agreed to issue to the Loan Note Holders warrants (the "Loan Note Warrants") over 6,500,000 ordinary shares of 2 pence each in the capital of the Company (the "Ordinary Shares"), exercisable between the Repayment Date and 30 months thereafter, at the lower of 19 pence per Ordinary Share and the price at which any future Ordinary Shares are issued prior to such exercise.

PUT OPTION

In order to secure this investment from the Loan Note Holders, Independent Power Corporation PLC ("IPC"), a company controlled by Peter Earl, chief executive of IPSA Group plc, has entered into an option agreement to acquire the Loan Notes, the accrued interest thereon, and the Loan Note Warrants from the Loan Note Holders, at the option of the Loan Note Holders (the "Put Option") in the event of certain defaults by the Company.

WORKING CAPITAL

Having entered in the conditional sale of one of the Turbines, which is still subject to completion of financing arrangements, the Company continues to market the three remaining Turbines actively. Given the continued extreme difficulty of the Company's present working capital position, as announced on 23 December 2009, the directors of IPSA believe that this transaction is in the best interests of shareholders, in that it provides essential short term funding. 

Insofar as the Loan Note Holders can exercise the Put Option to sell the Loan Notes and transfer the Loan Note Warrants to IPC, a related party of the Company, the independent directors of the Company consider, having consulted with the Company's Nominated Adviser, Execution Noble & Company Limited, that the terms of the Loan Note and Warrant agreements are fair and reasonable insofar as shareholders of the Company are concerned.

THE STANDARD BANK AND TURBOCARE AGREEMENT

The agreement between the Company, Standard Bank and TurboCare governs the marketing of the Turbines and the distribution of proceeds received in connection with a sale. The agreement also provides for a standstill arrangement whereby Standard Bank and TurboCare, the Company's two largest creditors, have undertaken that they will not take proceedings against IPSA to recover the debts owed to them and that they will not enforce any security rights they may have during the term of the agreement. This agreement terminates on 31 January 2011, or earlier in the event that Standard Bank and TurboCare are paid all sums due to them prior to that date or at Standard Bank's election after 30 November 2010 in the event that TurboCare has not secured a sale.

UPDATE RE CONDITIONAL SALE OF FIRST TURBINE TO IPC

As noted above, the conditional sale of the first turbine to IPC and its branch office, IPOL Bolivia Sucursal, which was announced on 23 December 2009, is still subject to completion of IPC's financing arrangements.

NEWCOGEN UPDATE

IPSA's wholly-owned subsidiary, Newcastle Cogeneration Pty Ltd ("NewCogen") is currently endeavouring to secure a power purchase contract with Eskom for its power plant which it owns in KwaZulu Natal under the delayed Medium Term Power Purchase Programme ("MTPPP"). There has been no new announcement from Eskom regarding the MTPPP. However, on 24 February 2010 the South African electricity regulator announced the new multi-year price determination for Eskom, which included an allocation of resources in connection with power purchase contracts with independent power producers, of which the MTPPP forms a part. It is the intention of the directors of NewCogen to substantially refinance its 18 MW power plant as soon as a power purchase agreement is signed. NewCogen needs to come to an agreement with Sasol Gas for a new gas contract and settle overdue amounts of approximately £3m claimed by Sasol in respect of gas consumption and take or pay liabilities prior to restarting the plant.

Speaking today in London, Peter Earl, CEO of IPSA said: "I am delighted that we have secured an important injection of short term liquidity into IPSA as we continue the marketing process to sell the remaining three Siemens Westinghouse 701 turbines not yet under contract."

The Company also announces that Noble & Company Limited, the Company's Nominated Adviser and Broker, has changed its name to Execution Noble & Company Limited with immediate effect.

- Ends -

For further information contact: