Ascent Resources Regulatory News (AST)

Ascent Resources plc

("Ascent" or "the Company")

Proposed Placing of 70,350,000 New Ordinary Shares at 1.0 pence* per share to raise £703,500

Amendment of Convertible Loan Note Instruments

Capital Reorganisation

and

Notice of General Meeting

Ascent is pleased to announce that is has conditionally raised £703,500 (before expenses) by way of the proposed Placing of 70,350,000 New Ordinary shares at a price of 1.0 pence* per share. The Company has also agreed a drawdown of an additional £296,500 from the Henderson Facility.

The Directors believe that this £1 million should allow the Company to meet its short-term obligations and work towards its new goal of achieving first gas within 12 months.

Highlights:

· Advanced stage of discussions with new industry partners, which, if completed, would allow the Company to produce and sell gas from the Petišovci field without the need to construct a new gas treatment facility which should significantly shorten the time to first gas and materially reduce upfront capital costs

· The Board expects to be in a position to enter into a binding agreement with an industry partner by the end of Q1 2016, with first gas revenue by the end of Q3 2016

· The Slovenian Environment Minister has informed the Company that she has rejected the appeals against the award in July 2015 of the IPPC permit, required to construct a gas treatment facility. Project partners are in discussions with the objectors to find ways to address their concerns without the need for a court review of the Minister's decision

· An agreement reached with the holders of a majority of the principal amounts outstanding pursuant to the Loan Notes to extend the maturity date of the Loan Notes by one year and to rebase the conversion price to the Issue Price

· A capital reorganisation to reduce the nominal value of an Ordinary Share from 0.1 pence to 0.01 pence and subsequently consolidate the Ordinary Shares by a factor of 20 to increase the nominal value to 0.2 pence per Ordinary Share

Having made a concerted effort over recent months to attract investment into the Company and having held discussions with a number of potential investors whose offers were less attractive than those put forward by the Placees, the Directors believe that they have secured the most favourable financing available to the Company at the current time.

*Following the proposed Capital Reorganisation

Circular

A Circular will be posted to shareholders today, the purpose of which is, amongst other things, is to outline the reasons for, and to explain the terms of the Proposals and to explain why the Board considers the Proposals (including the Resolutions) to be in the best interests of the Company and Shareholders as a whole and why the Directors recommend that you vote in favour of the Resolutions at the General Meeting as they intend to do in respect of the Ordinary Shares held by them. Extracts from the circular can be found below and a full copy will be made available on the Company's website www.ascentresources.com.uk shortly.

The General Meeting of the Company is to be held at 2.00 p.m. on 30 November 2015 at the offices of finnCap, 60 New Broad Street, London, EC2M 1JJ, at which the Resolutions will be proposed.

Expected Timetable

References to time are to London time unless otherwise stated. Save for the date of dispatch of this document, each of the times and dates above are subject to change. Any such change will be notified to Shareholders by an announcement on a Regulatory Information Service.

Other

Unless otherwise defined, all capitalised terms in this announcement shall have the meaning given to them in the Circular.

Enquiries:

The following has been extracted from the Circular which will be sent to Shareholders today.

LETTER FROM THE CHAIRMAN OF THE COMPANY

The Board of Ascent is pleased to announce that the Company is in an advanced stage of discussions with new industry partners, which, if completed, would allow the Company to produce and sell gas from the Petišovci field without the need to construct a new gas treatment facility. It is the opinion of the Ascent Board that this should significantly shorten the time to first gas and materially reduce upfront capital costs.

Based on progress to date, the Ascent Board expects to be in a position to enter into a binding agreement with an industry partner by the end of Q1 2016, with first gas revenue by the end of Q3 2016.

Additionally, the Board of Ascent is pleased to confirm that the Slovenian Environment Minister has informed the Company that she has rejected the appeals against the award in July 2015 of the IPPC permit, required to construct a gas treatment facility. Our project partners are in discussions with the objectors to find ways to address their concerns without the need for a court review of the Minister's decision.

The Board continues to view construction of the gas treatment facility as the long-term solution for the project.

Conditional on shareholder approval, the Company has today raised £703,500 by way of the proposed Placing of 70,350,000 New Ordinary shares at a price of 1.0 pence, following the proposed Capital Reorganisation. The Company has also agreed a drawdown of an additional £296,500 from the Henderson Facility. The Directors believe that this £1 million should allow the Company to meet its short-term obligations and work towards its new goal of achieving first gas within 12 months.

As part of the Proposals, the Company has agreed with the holders of a majority of the principal amounts outstanding pursuant to the Loan Notes to extend the maturity date of the Loan Notes by one year, from 19 November 2015 to 19 November 2016 and it has agreed to rebase the conversion price to the Issue Price.

The Company is also seeking shareholder approval for a capital reorganisation to reduce the nominal value of an Ordinary Share from 0.1 pence to 0.01 pence and subsequently consolidate the Ordinary Shares by a factor of 20 to increase the nominal value to 0.2 pence per Ordinary Share.

The purpose of this letter is to outline the reasons for, and to explain the terms of the Proposals and to explain why the Board considers the Proposals (including the Resolutions) to be in the best interests of the Company and Shareholders as a whole and why the Directors recommend that you vote in favour of the Resolutions at the General Meeting as they intend to do in respect of the Ordinary Shares held by them.

Set out at the end of the Circular is a notice convening a General Meeting of the Company to be held at 2.00 p.m. on 30 November 2015 at the offices of finnCap, 60 New Broad Street, London, EC2M 1JJ, at which the Resolutions will be proposed.

Ascent has a 75% interest in the Petišovci gas field in Slovenia, with its partner Geoenergo holding the remaining 25% through a concession signed in 2002 with a 19.5 year term, which is due for renewal in 2022. Ascent is liable for 100% of the financing obligations for the project. In 2011, two wells were drilled and flowed at commercial rates; however development has been delayed due to the permitting issues described in further detail below.

€42 million has been spent to date on the development of the field, which could supply a significant portion of Slovenia's future gas requirements thereby reducing its dependency on imported gas. The Board believes that Ascent's investment in the Petišovci project is the largest UK investment in Slovenia and Ascent's share of the project has an estimated NPV10 of €200 million.

In recognition of the key strategic importance of the project, earlier this year the Slovenian government designated Nafta Lendava, which holds an interest in the concession through its shareholding in Geoenergo, as one of 21 important national assets.

The preferred field development plan to date has been to install a Gas Gathering and Separation Station ("GGSS") to reduce the carbon dioxide content of the gas to meet national gas grid specifications, upgrade a metering station at the entry point to the national grid and connect the wells via the GGSS to the metering station at an estimated combined capital cost of €13 million.

Under Directives adopted by all EU Governments, the installation of the GGSS requires an IPPC Permit. The application was completed in July 2014 and submitted to the Environmental Agency ("ARSO") for approval. ARSO approved the permit in December 2014, subject to public consultation, and in June 2015 announced that, following the completion of this consultation, the Permit had been provisionally awarded, subject to a statutory period for appeals. In August 2015, the Company received formal notification that two non-government organisations had lodged appeals, to which Ascent submitted its responses in August 2015. The Slovenian Environment Minister recently informed the Company that she had rejected the appeals against the July 2015 award of the IPPC permit. The Company and its partners are in discussions with the objectors in an attempt to address their concerns and avoid a further appeal through the courts.

Whilst the award of the permit is not guaranteed, based on legal advice, the Board remains firmly of the view that the required IPPC Permit will eventually be issued in final form. However, if the matter has to be referred to the Slovenian courts then the final outcome may not be known until sometime in 2016.

The Company has identified two potential routes to market for its gas which are independent of the ongoing IPPC permitting process. Whilst neither route has been confirmed as viable and whilst there are still obstacles to overcome, the Ascent Board believes the Company now has a reasonable prospect of bringing its gas to market within the next twelve months.

3.1 Methanol plant

Adjacent to the field is a methanol plant (the "Plant"), which was previously operational in 2011 when it was owned by Nafta Petrochem. The Plant was purchased at auction on 30 September 2015 for €5.6 million by United States Methanol Corporation ("USMC") and completion of the sale is expected within three months. USMC, a Californian based company, has stated publicly that it intends to bring the Plant into operation and Ascent is in initial discussions with a view to supplying its gas. This would not require new processing facilities and could occur in advance of the IPPC Permit.

Once the sale process has completed, the Plant will need to be recommissioned, which is currently estimated to take approximately six months. As soon as this has been achieved the Board understands that the Plant could potentially take all of the Petišovci field's production during Phase One (10 MMscfd). In order to produce gas into the Plant, Ascent would need to recomplete and tie in the existing wells and carry out some work on the pipelines, which is estimated to cost approximately €3 million.

3.2 Outsourced processing

Ascent has recently identified a route from the Petišovci field to a third party owned processing facility in a neighbouring jurisdiction. The route is through a combination of existing pipeline and a length of planned pipeline which is being constructed by an unconnected third party. The existing pipeline has not been operational for many years and will therefore require some technical and legal work before it can be confirmed as viable. The Company has been advised that this process will take an estimated three months.

The Company is in an advanced stage of discussions with this new partner, which, if resulting in agreement, would allow the Company to produce and sell gas from the Petišovci field without the need to construct a new gas treatment works. It is intended that the gas will be transported along the existing and planned pipelines to the third party owned facility where it could be processed to a standard acceptable to the Slovenian national grid and returned for sale. In the opinion of the Ascent Board, this would significantly shorten the time to first gas, could potentially take 10 MMscfd of the field's production and would require an investment of approximately €3.2 million.

Based on progress to date, the Ascent Board hopes it will be in a position to enter a binding agreement in respect of the above in Q1 2016, with first revenue following by the end of Q3 2016.

3.3 Going forward

The Company continues to pursue all potential routes to market for its gas with the priority being to identify which is the quickest and most certain. The Company will progress its plans to obtain the IPPC permit which the Board views as the long term solution for the project. In the short term the Board believes that methanol or outsourced processing provide good interim solutions, with significantly shorter timelines to first gas, lower upfront cash commitment and no reliance on government permits. This will allow the Company to prove the significant potential of the field prior to making the more substantial investment required for the processing facilities at Petišovci.

To fund the Company whilst it pursues these opportunities, the Company has conditionally raised £703,500 at 1.0 pence per share by way of the Placing, arranged by PrimaryBid Limited, subject to approval by Shareholders.

PrimaryBid Limited is a wholly owned subsidiary of Darwin Strategic which is regulated and authorised by the Financial Conduct Authority (FCA).

The Company has also agreed a drawdown of £296,500 under the Henderson Facility. The Directors believe that this £1 million should allow the Company to meet its short-term obligations and work towards its new goal of achieving first gas within 12 months.

For the avoidance of doubt neither Darwin Strategic or PrimaryBid are subscribing for Placing Shares in their own right and there are no enduring arrangements between the Company and Darwin Strategic.

The 2013 CLNs and 2014 CLNs are due to mature on 19 November 2015. On maturity, the 2013 CLNs and 2014 CLNs will either convert into Ordinary Shares or be repaid.

The Company's ability to raise additional finance to repay the 2013 CLNs and 2014 CLNs in the absence of an IPPC permit and project funding is extremely limited and, as such, the Company does not have the cash resources available to it to repay the Loan Notes by the maturity date. Henderson has indicated that it does not wish to convert the Loan Notes it holds into Ordinary Shares. Accordingly, the Company has agreed with the majority holder in principal amount of the 2013 CLNs and 2014 CLNs amendments to amend the 2013 Convertible Loan Note Instrument and the 2014 Convertible Loan Note Instrument (the "Second Supplemental Loan Note Instruments"), as follows:

· the 2013 Convertible Loan Note Instrument and 2014 Convertible Loan Note Instrument have been amended to provide a maturity date of either 19 November 2016, or, if earlier, the occurrence of a Liquidity Event; and

· the 2013 CLNs and 2014 CLNs now have an effective conversion price equivalent to the Issue Price such that the holders of 2013 CLNs and 2014 CLNs (assuming full draw-down of the Loan Notes and assuming all Loan Note holders convert) will on conversion hold some 88.7 per cent. of the enlarged share capital of the Company on a fully diluted basis (including Deferred Shares).

Henderson has confirmed that it will not convert the Loan Notes held by it in such amounts as would cause its holding of voting rights in the Company to equal or exceed 30%.

Shareholders should note that, unlike the previous position in relation to the 2013 CLNs and 2014 CLNs, conversion of the 2013 CLNs and 2014 CLNs following the amendments described above will not be subject to a waiver of the provisions of Rule 9 on the City Code on Takeovers and Mergers. Accordingly, if Henderson or any other holders of the 2013 CLNs or the 2014 CLNs exercise their right of conversion and they hold equal to or more than 30 per cent. of the total voting rights in the Company, such holder will be required to make a mandatory bid for the remaining ordinary shares in the capital of the Company not held by them in accordance with the City Code on Takeovers and Mergers.

Henderson holds 95 per cent. of the 2013 CLNs and 66 per cent. of the 2014 CLNs and have approved the amendments to the 2013 CLNs and 2014 CLNs described above. The other holders of 2013 CLNs and 2014 CLNs are accordingly now subject to the same changes and, as such, other holders of 2013 CLNs and 2014 CLNs are no longer able to seek repayment of the 2013 CLNs or 2014 CLNs held by them until the new maturity date described above.

The Company has to date been reliant on the continued support of its shareholder Henderson Global Investors ("Henderson") through the £7,000,000 loan facility entered into in May this year, which the Company can draw down only at Henderson's discretion.

As previously announced the Company has made significant reductions in its operating expenses through headcount reductions and efficiency savings.

Until the Company has established a clear route to first gas, the Company is limited in its ability to raise additional capital to develop the Petišovci asset.

Therefore, the proceeds from the Placing and the draw-down on the Henderson facility, together totalling £1 million, both conditional on the passing of the Resolutions, are expected to be sufficient to cover existing amounts due to our Petišovci partners (estimated at approximately €0.7 million) and to fund the reduced operating costs of the Company until Q1 2016, when further funding will be required to achieve first gas, once the route to first gas is formally confirmed.

In addition, as detailed in paragraph 5 above, the Company has been given an assurance by Henderson that the Loan Notes held by it will not be called for payment until 19 November 2016, or, if earlier, the occurrence of a Liquidity Event.

Shareholders are advised that in the event that the Proposals are not implemented the Company may have insufficient working capital to continue trading in the near term.

Prior to the proposed Capital Reorganisation, the Issue Price would have been less than the current nominal value of an Ordinary Share and, under the Act, a company cannot issue shares at a price below their nominal value.

The Directors propose, therefore, subject to the passing of Resolutions 1 and 2, that the Company effects the Capital Reorganisation on the basis that:

(a) the Existing Ordinary Shares of 0.1 pence each will be subdivided into:

i. one Redenominated Ordinary Share (being an ordinary share in the capital of the Company with a nominal value of 0.01 pence);

ii. one Deferred Share (being a deferred share in the capital of the Company with a nominal value of 0.09 pence); and

(b) the Redenominated Ordinary Shares of 0.01 pence each (resulting from the subdivision referred to in paragraph (a) above) be will consolidated into new ordinary shares of 0.2 pence each (the "New Ordinary Shares") on the basis of one ordinary share for every 20 ordinary shares of 0.01 pence each.

Where the Capital Reorganisation results in any Shareholder being entitled to a fraction of a New Ordinary Share, such fraction shall be aggregated and the Directors intend to sell (or appoint another person to sell) such aggregated fractions in the market and retain the net proceeds for the benefit of the Company.

The Deferred Shares will not be admitted to trading on AIM (or any other investment exchange). The Deferred Shares will have limited rights, and will be subject to the restrictions, as set out in the Company's New Articles, proposed to be adopted at the General Meeting, and as summarised below.

The Deferred Shares will not be transferable. The holders of the Deferred Shares shall not, by virtue or in respect of their holdings of Deferred Shares, have the right to receive notice of any general meeting of the Company or the right to attend, speak or vote at any such general meeting.

The Deferred Shares will not entitle their holders to receive any dividend or other distribution. The Deferred Shares will on a return of assets in a winding up entitle the holder only to the repayment of £1.00 for the entire class of Deferred Shares after repayment of the capital paid up on the New Ordinary Shares plus the payment of £10,000,000 per New Ordinary Share.

The Company will have irrevocable authority at any time to appoint any person to execute on behalf of the holders of the Deferred Shares a transfer thereof and/or an agreement to the transfer of the same to such person as the Company may determine or as the Company determines as custodian thereof, without making any payment to the holders thereof, and/or consent to cancel the same (in accordance with the provisions of the Act) without making any payment to or obtaining the sanction of the holders thereof. The Company may, at its option at any time, purchase all or any of the Deferred Shares then in issue, at a price not exceeding £1.00 for each aggregate holding of Deferred Shares so purchased. The Directors consider the Deferred Shares, so created, to be of no economic value.

The Articles have been amended, inter alia, to reflect the creation of the Deferred Shares and to set out the rights attaching to them and, accordingly, Resolution 9 in the notice of General Meeting seeks approval to adopt the New Articles of the Company reflecting, inter alia, these changes.

No share certificates will be in issued in respect of the Deferred Shares. Existing share certificates will remain valid for the Redenominated Ordinary Shares.

The New Ordinary Shares will be freely transferable and application will be made for the New Ordinary Shares to be admitted to trading on AIM. The record date for the Capital Reorganisation is 5.00 p.m. on 30 November 2015, unless otherwise agreed by the Board.

The rights attaching to the New Ordinary Shares will be identical in all respects to those of the Existing Ordinary Shares.

One consequence of the Capital Reorganisation is that Shareholders holding fewer than 20 Existing Ordinary Shares will receive no New Ordinary Shares, they will, however, receive Deferred Shares.

PrimaryBid is a trading name of PrimaryBid Limited which is wholly owned by Darwin Strategic Limited which is regulated and authorised by the FCA.

Pursuant to the Placing, the Company will pay to PrimaryBid Limited a commission of 4.5 per cent. of the gross proceeds of the Placing (the "Commission"). PrimaryBid is acting as a broker for this transaction.

Darwin Strategic is an investment held by funds managed by Henderson. Funds managed by Henderson are themselves substantial shareholders in Ascent, holding in aggregate 10.7 per cent. of the voting rights of the Company and as such are considered to be a related party of the Company for the purpose of the AIM Rules. Darwin Strategic is therefore also a related party of the Company for the purpose of the AIM Rules. The payment of the Commission to Darwin Strategic therefore constitutes a related party transaction pursuant to AIM Rule 13. The Independent Directors of the Company, having consulted with the Company's nominated adviser, finnCap, consider that the terms of the payment of the Commission to PrimaryBid are fair and reasonable insofar as the Company's shareholders are concerned.

The approval by Henderson as a substantial shareholder of the Company of the amendments contained in the Second Supplemental Loan Note Instruments by Henderson, constitutes a related party transaction for the purposes of AIM Rule 13.

The Independent Directors, having consulted with the Company's nominated adviser, finnCap, consider that the amended Loan Note Instruments are fair and reasonable insofar as the Company's shareholders are concerned.

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 such Admission will become effective in accordance with Rule 6 of the AIM Rules and that dealings will commence at 8.00 a.m. on 1 December 2015.

Set out at the end of the Circular is a notice convening a General Meeting of the Company to be held at 2.00p.m. on 30 November 2015 at the offices of finnCap, 60 New Broad Street, London, EC2M 1JJ, at which the Resolutions will be proposed.

The Resolutions:

(a) approve the subdivision of the entire issued share capital of the Company into redenominated ordinary shares and deferred shares;

(b) approve the consolidation of the redenominated ordinary shares;

(c) grant authority to the Directors under section 551 of the Act, to allot relevant securities in relation to the issue of the Placing Shares;

(d) grant authority to the Directors under section 551 of the Act, to allot relevant securities in relation to the conversion of the Loan Notes;

(e) grant authority to the Directors under section 551 of the Act, to allot relevant securities in relation to the issue of equity securities up to an aggregate nominal amount of £600,000;

(f) empower the Directors, pursuant to section 570 of the Act, to dis-apply the statutory pre-emption rights in relation to the allotment of equity securities to allow the issue of the Placing Shares;

(g) empower the Directors, pursuant to section 570 of the Act, to dis-apply the statutory pre-emption rights in relation to the allotment of equity securities to allow the conversion of the Loan Notes;

(h) empower the Directors, pursuant to section 570 of the Act, to dis-apply the statutory pre-emption rights in relation to the allotment of equity securities up to an aggregate nominal amount of £600,000;

(i) approve the adoptions of the New Articles.

Please check that you have received the following with the Circular:

· a Form of Proxy for use in respect of the General Meeting; and

· a reply-paid envelope for use in connection with the return of the Form of Proxy (in the UK only).

Whether or not you propose to attend the General Meeting in person, you are strongly encouraged to complete, sign and return your Form of Proxy in accordance with the instructions printed thereon as soon as possible, but in any event so as to be received, by post at Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol, BS99 6ZY or, during normal business hours only, by hand, at Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol, BS13 8AE by no later than 2.00 p.m. on 26 November 2015 (or, in the case of an adjournment of the General Meeting, not later than 48 hours before the time fixed for the holding of the adjourned meeting).

This will enable your vote to be counted at the General Meeting in the event of your absence. The completion and return of the Form of Proxy will not prevent you from attending and voting at the General Meeting, or any adjournment thereof.

Having made a concerted effort over recent months to attract investment into the Company and having held discussions with a number of potential investors whose offers were less attractive than those put forward by the Placees, the Directors believe that they have secured the most favourable financing available to the Company at the current time.

The Directors intend to vote in favour of the Resolutions in respect of their aggregate shareholdings of 269,500 Ordinary Shares representing approximately 0.2 per cent. of the Company's Existing Issued Share Capital.

ADMISSION STATISTICS

Notes:

1. Assuming the Resolutions are passed at the General Meeting

2. Assuming all of the Placing Shares are issued under the Placing.

3. Excluding Loan Notes

4. The Placing is conditional on the total of the Placing plus draw-downs under the Henderson facility totalling £1 million. This includes £100,000 advanced on 3 November 2015

DEFINITIONS

A reference to £ is to pounds sterling, being the lawful currency of the UK