Share capital reorganisation

Mercom Oil Sands plc

("Mercom" or "the Company")

Share capital reorganisation

Issue of equity

The Company announces that the Board has decided to proceed with the share capital reorganisation approved at the General Meeting of the Company held on 24 May 2013 (the "Reorganisation"). The effect of the Reorganisation is to reduce the number of ordinary shares in issue by a multiple of 50.

Under the Reorganisation, every 50 existing ordinary shares of 0.1p each ("Existing Ordinary Share") will be consolidated into one ordinary share of 5p each ("Consolidated Share") (the "Consolidation"). Following the Consolidation, each Consolidated Share will be sub-divided into one New Ordinary Share of 0.1p each ("New Ordinary Share") and one deferred share of 4.9p each ("Deferred Share").

As a consequence of the Reorganisation, any shareholder holding a number of Existing Ordinary Shares not exactly divisible by 50 will be left with a fractional entitlement. Fractional entitlements will be aggregated and sold in the market with the proceeds being retained by the Company where consistent with the resolution approving the Reorganisation.

The Company has today granted an option to John Zorbas, the Company's Chief Executive Officer, to subscribe at any time during the 10 year period from the date of grant for 100,049 Existing Ordinary Shares (representing 0.02% of the issued ordinary share capital of the Company) at an exercise price of 1p per share. John Zorbas has exercised this option and 100,049 Existing Ordinary Shares have been issued to him today by the Company credited as fully paid. Application will be made for such shares to be admitted to trading on AIM. Following the exercise of the option, John Zorbas is interested in 200,049 Existing Ordinary Shares (representing 0.04% of the issued ordinary share capital of the Company).

The Reorganisation will not affect the rights attaching to the ordinary shares of the Company. It will be made by reference to holdings of ordinary shares on the register of members as at the close of business on 30 July 2014. 

Shareholders who hold their ordinary shares in CREST will have their CREST accounts credited with their New Ordinary Shares following their admission to AIM, which is expected to take place on 31 July 2014 (see below). Each other holder of New Ordinary Shares will be issued with a new share certificate which is expected to be despatched by 7 August 2014.

Application will be made to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on AIM. It is expected that admission will become effective on 31 July 2014.

Reorganisation statistics

Timetable

Each of the times and dates refer to London time and are subject to change by the Company, in which case details of the new times and dates will be notified to the London Stock Exchange and the Company will make an appropriate announcement through a Regulatory Information Service.

Deferred Shares

The Company will adopt new articles of association which will include rights attaching to the Deferred Shares, likely to be minimal and thereby rendering them effectively valueless. The rights which will attach to the Deferred Shares (created pursuant to the Reorganisation) can be summarised as follows:

· they will not entitle holders to receive any dividend or other distribution or to receive notice or, speak or vote at general meetings of the Company;

· on a return of assets on a winding up, they will only entitle the holder to the amounts paid up on such shares after the repayment of the capital paid up on the Ordinary Shares and the payment of £100 million per Ordinary Share;

· they will not be freely transferable;

· the creation and issue of further shares which rank equally or in priority to the Deferred Shares or the passing of a resolution of the Company to cancel the Deferred Shares or to effect a reduction of capital will not constitute a modification or abrogation of their rights; and

· the Company will have the right at any time to purchase all of the Deferred Shares for an aggregate consideration of not more than £1.00.

No application will be made for the Deferred Shares to be admitted to trading on AIM or any other stock exchange. No share certificates will be issued in respect of the Deferred Shares.

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