Ascent Resources Regulatory News (AST)

Ascent Resources plc

("Ascent" or "the Company")

Convertible loan note issue

The Board of Ascent is pleased to announce that it has agreed a variation to the existing £5 million 2014 Convertible Loan Note Instrument ("the Instrument") pursuant to which Henderson Global Investors Limited and Henderson Alternative Investment Advisor Limited (together, "Henderson") subscribed for £2 million in principal amount of loan notes ("Convertible Loan Notes" or "Loan Notes") as announced on 5 February 2014 ("the First Tranche"). Under the terms of the variation, Henderson has agreed to subscribe for further Convertible Loan Notes of up to £2 million in principal amount on the terms of the amended Instrument ("the Amended and Restated Instrument") ("the Second Tranche"), as detailed below.

Background

As announced on 4 August 2014, Global Power Sources S.r.l ("GPS") and their partners, Salomon Werner HAB Privee Limited, formerly known as Salomon Partners WRS Werner Rothschild & CIE Limited ("WRS"), failed to make payment to Ascent of the £11.7m required to fund GPS's investment in Ascent as approved by shareholders in a general meeting held on 5 June 2014.

As a result, the board of Ascent has been obliged to explore alternative sources of funds, including maintaining an on-going dialogue with GPS in this respect. Whilst positive discussions continue, the Company has not yet concluded a replacement funding transaction and has therefore approached Henderson to agree the basis for further drawdowns of up to £2 million under the Amended and Restated Instrument.

Details of the New Convertible Loan Notes

Under the terms of the variation, Henderson has agreed to subscribe for up to an additional £2 million of Convertible Loan Notes. The Convertible Loan Notes will be issued in units of £1 and interest will be at a fixed rate of 9% per annum, which will be rolled up quarterly in arrears and included as principal to be repaid or converted. The Convertible Loan Notes together with the convertible loan notes issued in 2013 will be secured by a charge over the shares of the Company's principal subsidiaries, Ascent Slovenia Limited and Ascent Resources d.o.o. and will be convertible at any time into ordinary shares of 0.1 pence each in the share capital of the Company ("Ordinary Shares") at the noteholder's option, at a conversion price of 0.2 pence per Ordinary Share.

Under the original Instrument, the subscription of the Second Tranche by Henderson would have caused the conversion rate applicable to the First Tranche to switch immediately from an effective price of 1p per Ordinary Share to an effective price of 0.2p per Ordinary Share. Henderson has however, agreed to defer this change to the effective conversion price until 1 December 2014, which would allow Ascent to repay the Second Tranche without the penalty of the reduced effective conversion price for the First Tranche. In the event of a transaction before 1 December 2014 constituting a change of control as defined in the City Code on Takeover & Mergers, both the First Tranche and the Second Tranche would convert at the reduced effective price of 0.2p per Ordinary Share. In return Ascent has agreed to reduce the total amount of Henderson's commitment to subscribe further Convertible Loan Notes from £3 million to £2 million.

Shareholders are reminded that together with the convertible loan notes issued in 2013, and assuming the full £2 million is subscribed for under the Second Tranche, the Company will have in issue Convertible Loan Notes totalling approximately £10 million, including accrued interest, which fall due for redemption in December 2014 and January 2015. As stated above, the Company is exploring various funding options.

Related Party Transaction

Henderson is a substantial shareholder in Ascent, holding approximately 12.5% of the voting rights of the Company and as such is considered to be a related party of the Company as defined by the AIM Rules. Therefore the amendments to the Instrument resulting in the Amended and Restated Instrument, and the issue of the new Convertible Loan Notes thereunder, constitute a related party transaction pursuant to AIM Rule 13. The independent directors of the Company (being Nigel Moore, Cameron Davis, Len Reece and Colin Hutchinson), having consulted with the Company's nominated adviser, finnCap Limited, consider that the terms of the Convertible Loan Notes are fair and reasonable insofar as the Company's shareholders are concerned.

Use of funds

Of the additional £2 million to be subscribed by Henderson under the Amended and Restated Instrument, £0.3 million will be used to repay the outstanding balance under the short term loan facility from Darwin Strategic Limited, which was due for repayment at the beginning of June 2014.

The remaining £1.7 million is expected to provide the Company with sufficient funds to complete the permitting process and issue tender documentation for key infrastructure necessary for full field development.

Permitting update

The key Integrated Pollution Prevention & Control ("IPPC") permit was submitted to the Slovenian Environmental Agency in June 2014. The Company has been informed that the decision making process normally lasts approximately six months. The Ascent board regards the award of the IPPC permit as the last significant hurdle to commercial gas production that is outside of the Company's control.

Once the IPPC permit is issued, the Board, based on on-going discussions with interested banks, believes that suitable project finance should be available to fund construction of infrastructure and pipelines.

The process of purchasing, constructing and commissioning this infrastructure is expected to take no more than 12 months from the date the IPPC permit is received. The Company is preparing detailed tender documentation for the upstream pipeline connection into the national grid and for the new gas processing facility. These are the key long lead items required for commercial production into the national grid and the Company expects to issue these documents in the coming months.

Summary

The additional £2 million Convertible Loan Note subscription is expected to provide the funding required to support the Company through the permitting phase. Thereafter it is expected that bank project funding will cover the vast majority of the costs before gas flows.

The receipt of the IPCC permit will enable the Company to; at long last, begin to realise the significant value of its Petišovci asset which is estimated to have an NPV10 in excess of €150 million.

Enquiries:

Ascent Resources plc.

Clive Carver / Len Reece

Tel: +44 (0)20 7251 4905

finnCap (Nominated Adviser and Broker)

Charlotte Stranner

Tel: +44 (0) 20 7220 0500