Loan Agreements

27 July 2012

IPSA Group PLC

("IPSA" or "the Company")

Issue of New Loan Notes and Entry into a Loan Agreement

Loan Notes

IPSA Group PLC, the developer, owner and operator of power generation capacity in Southern Africa, announces that, on 26 July 2012, the Company agreed to enter into a new loan note agreement with several investors in order to refinance the loan notes which were due for redemption in 2011.

The original loan notes which were issued on 5 March 2010 had provided working capital of £650,000, and will be replaced by new unsecured non-convertible loan notes (the "2012 Loan Notes") for the same amount. The 2012 Loan Notes are repayable, together with accrued interest thereon, on the earlier of:

·; the sale of the Company's two Siemens Westinghouse 701 DU turbines;

·; a full or partial sale of certain other plant or equipment in South Africa for at least US$8 million;

·; a change of control of the Company; or

·; 31 July 2013;

The 2012 Loan Notes bear interest at 6% per annum and carry a praecipium payment of 10% of the face value of the notes. Both the interest and the praecipium are payable together with the principal on any of the above listed repayment events.

Sterling Trust Limited ("Sterling Trust"), which is the Company's largest shareholder, has subscribed for £350,000 of the 2012 Loan Notes.

New Loan Agreement

On 26 July 2012, the Company and its subsidiary Newcastle Cogeneration Pty. Limited ("Newcogen"), IPSA's wholly-owned operation in Newcastle, KwaZulu Natal, also concluded terms with Sterling Trust for a loan facility of £550,000 to provide Newcogen with financing to enable it to discharge a proposed settlement with Sasol Gas Limited in relation to a gas supply agreement which was terminated in August 2009 (the "Newcogen Loan"). 

The Newcogen Loan carries interest at a rate of 1.25% per month on the first £150,000 drawn down under the facility, and 1% per month on the balance when drawn down. Amounts drawn down under the facility are repayable, together with accrued interest thereon, on the earlier of:

·; the sale of the Company's two Siemens Westinghouse 701 DU turbines; or

·; 26 January 2013;

Sterling Trust already has an outstanding loan to Newcogen for a principal amount of £300,000.

Working Capital

Neither the Newcogen Loan nor the 2012 Loan Notes will provide working capital for the Company other than as set out above - specifically in relation to discharging the proposed SASOL settlement. Although Newcogen is cash generative, IPSA continues to rely on the continued support of all its creditors whilst it works towards a disposal of its two remaining turbines.

Related Party Transactions

Sterling Trust holds approximately 29% of the issued share capital of the Company and is therefore deemed to be a Related Party under the AIM Rules. Sterling Trust's subscription for £350,000 of the 2012 Loan Notes and its £550,000 loan to Newcogen are both related party transactions. The Company's independent directors, having consulted with Execution Noble & Company Limited, the Company's Nominated Advisor, consider that the terms of the 2012 Loan Notes and the terms of the Loan facility with Sterling Trust are fair and reasonable insofar as the Company's shareholders are concerned.

Richard Linnell, Chairman, commented "We are pleased to be in a position to settle the long-standing dispute with SASOL, and are thankful for the continued support of our creditors and lenders".

- Ends -

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