Cabot Energy Regulatory News (CAB)

Prior to publication, the information contained within this announcement was deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). With the publication of this announcement, this information is now considered to be in the public domain.

Cabot Energy Plc

("Cabot Energy", "the Group" or "the Company")

Consolidation of Canadian asset portfolio

Proposed Subscription, Placing and Open Offer

to raise up to US$16.5 million in aggregate

Rule 9 Whitewash

Cabot Energy (AIM: CAB), the AIM quoted oil and gas company focused on production led growth balanced with high impact exploration and appraisal opportunities, announces that it has conditionally agreed to acquire High Power Petroleum (NOP) UK Limited ("H2P UK"), which owns a 25 per cent. interest in the Company's Canadian assets and holds an option to acquire a further 25 per cent. for US$4.0 million (the "Acquisition").

The consideration for the Acquisition is a total of US$8.71 million, to be paid through the issue of New Ordinary Shares and a deferred cash consideration of US$1.75 million. H2P UK is a wholly owned subsidiary of High Power Petroleum LLC ("H2P"), the Company's 29.9 per cent. shareholder.

The Company has also conditionally raised up to US$16.5 million (£12.3 million) through a subscription, placing and open offer (the "Fundraising") at a price of 5 pence per Ordinary Share ("the Issue Price").

Highlights

Acquisition of H2P UK

§ The Company will take 100 per cent. control of its Canadian production and development portfolio in the Rainbow and Virgo regions of north west Alberta (the "Canadian Assets") by acquiring:

- the remaining 25 per cent. held by H2P; and

- an option held by H2P to acquire a further 25 per cent. of the Canadian Assets for US$4 million (the "H2P Option").

§ The consideration of US$8.71 million for the Acquisition is based upon 50 per cent. of the net present value, at a 10 per cent. discount rate, of the proven reserves as calculated by McDaniel & Associates Ltd:

- less the cost of exercising the H2P Option; and

- less certain long term abandonment liabilities and taxes.

§ There is a strong commercial rationale supporting the Acquisition:

- given the Directors' belief in the medium to long term value potential of the Canadian Assets, through both growth in production and cashflow and reserves upgrades, increasing the Company's working interest in the Canadian Assets is in the best interests of the business;

- the Directors believe it is preferable to the Company to have the benefit of a 100 per cent. working interest in the Canadian Assets, rather than be reduced to 50 per cent. interest due to H2P exercising the H2P Option; and

- gross production, cashflow and reserves from the project will now accrue to the Company from 1 January 2018.

Equity capital Raise

§ The Company is raising up to £12.3 million, gross of expenses, as follows:

- a subscription with H2P for £8.9 million;

- a placing of £1.4 million; and

- an open offer of up to £2.0 million on the basis of 1 Open Offer Share for every 8 Existing Ordinary Shares.

§ The funds raised are proposed to be invested in the winter and summer work programmes in Canada with the objective of doubling production by the end of 2018

§ The Issue Price of 5 pence per ordinary share represents a discount of 2.5 per cent. to the closing mid-market price of 5.125 pence on 18 December 2017

Pro forma business following the Acquisition and Equity Capital Raise

§ Canadian production of 800 - 1,000 bopd

§ Italian high margin gas production of 130 boepd accruing to the Company

§ Proven and Probable reserves of 2.9 million barrels of oil equivalent

§ More than US$17 million in cash reserves on the basis that the Open Offer is fully subscribed

§ Target of doubling production by end of 2018 to 1,600 - 2,000 bopd

§ Supportive majority shareholder in H2P, who will own 56.5 per cent. of the Enlarged Issued Share Capital, assuming the Open Offer is fully subscribed

Keith Bush, Chief Executive Officer, commented:

"The Company has made real progress over the last three years investing in the development of our asset base which has created a solid foundation for future growth. The tougher times of the recent years have provided opportunity that Cabot has taken advantage of to firmly position the Company on a strong growth trajectory.

"Following the completion of the Acquisition, the Company will achieve a key production milestone. The detailed technical subsurface work, combined with the drilling and workover operations conducted this year, have substantially de-risked future production growth. With the capital raise proposed, the Company will be properly financed to accelerate the development programme in Canada and achieve material growth in production and cashflow."

Robert Friedland, Co-founder and Executive Chairman of I-Pulse Inc., the parent company of H2P, commented:

"This investment highlights our strategy of targeting high quality assets and management teams, then leveraging our proprietary geophysical and well-stimulation technologies to multiply reserves and production."

Scott Aitken, Chief Executive Officer of H2P, commented:

"This transaction will transform Cabot's capitalisation and accelerate the development of its Canadian land position, fully utilising the substantial capacity of the Company's existing production facilities. In addition, I-Pulse's BlueSpark technology has successfully stimulated increased production at Cabot's existing carbonate producers, over the last year, and will be used to benefit further wells in 2018. We look forward to supporting the Company in its future growth plans."

For further information please contact:

In Accordance with AIM Rules - Guidance for Mining and Oil & Gas Companies, the information contained in this announcement has been reviewed and signed off by the CEO of Cabot Energy, Mr Keith Bush, who has 26 years' experience as a petroleum engineer. He has read and approved the technical disclosure in this regulatory announcement. The technical disclosure in this announcement complies with the SPE standard.

Note to Editors:

Cabot Energy is an oil and gas company focused on production led growth. The Company is undertaking a redevelopment and production project in north west Alberta and has a broader portfolio of exploration and appraisal opportunities in countries of relatively low political risk, primarily Italy. Comprehensive information on Cabot Energy and its oil and gas operations, including press releases, annual reports and interim reports are available from Cabot Energy's website: www.cabot-energy.com

Capitalised terms used in this announcement have the meanings given to them in the Definition section at the end of the announcement.

1. Introduction

The Company has conditionally agreed to acquire the 25 per cent. interest in the Canadian Assets not currently owned by the Group and the H2P Option. Upon completion of the Acquisition, the Group will own a 100 per cent. interest in the Canadian Assets. The total consideration for the Acquisition is US$8.71 million to be satisfied by the issue of 103,796,081 new ordinary shares at the Issue Price to H2P and deferred consideration of US$1.75 million in cash payable over a 12 month period commencing in February 2018.

The Company also proposes to raise, conditional among other things, upon the passing of resolutions by shareholders at the General Meeting and upon admission of the new ordinary shares to trading on AIM:

a) £8,925,000 by way of the Subscription of 178,500,000 Subscription Shares at the Issue Price;

b) £1,435,000 by way of the Placing of 28,700,000 Placing Shares at the Issue Price; and

c) up to a further £1,973,931 by way of an Open Offer to Qualifying Shareholders through the issue of up to 39,478,629 Open Offer Shares at the Issue Price.

The Issue Price of 5 pence represents a discount of approximately 2.5 per cent. to the mid-market closing price per Existing Ordinary Share of 5.125 pence on 18 December 2017 being the last business day prior to the announcement of the Acquisition, the Subscription, the Placing and the Open Offer (together the "Proposals").

The net proceeds of the Fundraising will be used primarily to fund the 2018 drilling and workover campaigns on the Canadian Assets in order to increase production and reserves and ongoing working capital requirements.

The Board believes that there is a strong commercial rationale for the Acquisition for the following reasons:

§ the Directors believe in the medium and long term value of the Canadian Assets, given the potential for further production growth and reserves upgrades at competitive investment metrics and therefore consider it is in the best interests of Shareholders to increase the Company's working interest in the Canadian assets;

§ the Directors believe it is preferable to the Company to have the benefit of a 100 per cent. working interest in the Canadian Assets, rather than be reduced to 50 per cent. interest due to H2P exercising the H2P Option; and

§ from an operational, financial and investor relations perspective, there will be benefits in respect of transparency and control by the Company having 100 per cent. ownership of the Canadian Assets.

On completion of the Proposals, H2P will hold a minimum of approximately 56.53 per cent. and a maximum of 60.09 per cent. of the share capital as enlarged by the Proposals assuming full or nil subscription under the Open Offer respectively, the issue of the Placing Shares and there being no exercise of any options or warrants over ordinary shares prior to Admission. Under Rule 9 of The UK City Code on Takeovers and Mergers, the issue of the Consideration Shares and the Subscription Shares to H2P would normally result in H2P being obliged to make an offer to all other shareholders to acquire their shares. The Takeover Panel has agreed to waive this obligation subject to the approval of the shareholders other than H2P and City Financial Investment Company Limited, who are participating in the Subscription and Placing respectively, (on a poll) at the General Meeting.

2. Background to, reasons for and details of the Acquisition

During 2017, the Company has made significant progress in developing the Canadian Assets. At the beginning of 2017, the Canadian Assets were producing approximately 325 bopd gross. Following two capital investment work programmes during the year, the Company announced on 24 November 2017 that gross production from the Canadian Assets was between 750 bopd and 850 bopd. In addition, the Company is in the process of completing further well activities prior to year end, which, if successful would add 150 bopd (gross) production upon completion. Accordingly, the Company is targeting an exit rate for the year of between 800 and 1,000 bopd gross production from the Canadian Assets.

The Company has, and plans to, increase production through well workovers, the use of I-Pulse's BlueSpark well stimulation technology and drilling sidetrack wells. In addition, the Company has been working on a subsurface mapping project on the Virgo Assets. The objective of the project is to use 3D seismic to delineate the extent of the Keg River reefs for future drilling and production in addition to the other production horizons, which are known to be present in the area. The mapping project is forecast to be completed in 2018, and it is likely that drilling may start in the Virgo Assets later that year.

On 8 November 2017, the Company announced that McDaniel had provided an updated reserves report on the Canadian Assets as at 30 September 2017. The report stated that the Proven and Probable reserves for the Canadian Assets were 2.9 million barrels of oil equivalent, on a gross basis, representing an increase of 53 per cent. from the prior year.

Following the year's operating and subsurface activities, the Directors believe that further capital can be invested in the Canadian Assets to achieve material production and reserves growth at competitive investment metrics. The net proceeds of the Fundraising will predominantly be used to fund the 2018 drilling and workover campaigns to increase production and reserves across both the Rainbow Assets and Virgo Assets.

In December 2016, the Company sold a 25 per cent. working interest in the Canadian Assets to H2P. As part of this transaction H2P subscribed for Ordinary Shares and farmed into certain other assets in Italy and Australia. As part of these arrangements, the Company granted the H2P Option to acquire a further 25 per cent. working interest in the Canadian Assets for a total consideration of US$4 million, such option to be exercised no later than 31 December 2017 (subsequently extended to 31 January 2018). Following completion of this transaction, H2P became the Company's largest shareholder, with a current holding of 29.89 per cent. of the ordinary issued shares capital.

The Directors believe that it would be in the best interests of the Company not to have the H2P Option exercised, which, if exercised, would reduce the production and cashflow accruing to the Company. Furthermore, given the belief of the Directors in the medium and long term future value of the Canadian Assets, it is preferable for the Company to increase its working interest in these assets, ahead of further production and reserves growth. From an operational, financial and investor relations perspective, there will be benefits in respect of transparency and control by the Company having 100 per cent. ownership of the Canadian Assets.

Therefore, the Company has agreed to acquire H2P UK (which indirectly owns the 25 per cent. working interest in the Canadian Assets not owned by the Company and the H2P Option) from H2P, for a total consideration of US$8.71 million to be satisfied by the issue to H2P of the Consideration Shares and deferred consideration of US$1.75 million in cash, to be paid over a 12 month period commencing in February 2018.

The value of the total consideration corresponds to 50 per cent. of the net present value, using a ten per cent. discount rate, of the Proven Reserves as calculated by McDaniel of the Rainbow Assets and Virgo Assets as at 30 September 2017 (CAD$34.95 million or US$27.63 million at 100 per cent. value). This value, less the US$4 million cost of exercising the H2P Option and less the further deduction of certain taxes and discounted long term abandonment liability costs was used to determine the consideration price.

3. Details of the Fundraising and Use of Proceeds

The Company proposes to raise up to approximately £12,333,931 (gross) through the Placing, Subscription and Open Offer conditional, amongst other things, upon the passing of the Resolutions and on Admission. A circular will be sent to shareholders shortly setting out the proposals and convening the General Meeting.

The Placing

The Company has conditionally raised £1,435,000 (gross) by the issue of 28,700,000 Placing Shares at the Issue Price through SP Angel Corporate Finance LLP pursuant to the terms of the Placing Agreement.

The Placing is conditional on, amongst other things, the completion of the Subscription and the Acquisition, the passing of the Resolutions at the General Meeting and on Admission of the Placing Shares occurring on or before 8.00 a.m. on 8 January 2018 (or such later date as SP Angel and the Company may agree, being not later than 8.00 a.m. on 22 January 2018). Cabot Energy has appointed SP Angel as its agent to use its reasonable endeavours to procure subscribers for the Placing Shares at the Issue Price pursuant to the Placing Agreement. The Company has agreed to pay SP Angel fees and commissions in connection with its appointment.

Under the terms of the Placing Agreement, the Company has given certain customary warranties and indemnities to SP Angel in connection with the Placing and other matters relating to the Company and its affairs.

The Subscription

Pursuant to the Subscription Agreement, H2P has conditionally agreed to subscribe for 178,500,000 Subscription Shares raising £8,925,000 in aggregate at the Issue Price. The Subscription is conditional, inter alia, on the completion of the Placing and the Acquisition, the grant of the Waiver, the passing of the Resolutions and the Subscription Agreement becoming unconditional in all respects.

The Open Offer

The Board has decided to make an Open Offer so that all Qualifying Shareholders have an opportunity to participate at the same Issue Price as investors have done in the Subscription and the Placing. Accordingly, up to 39,478,629 Open Offer Shares are being made available to Qualifying Shareholders at a price of 5 pence per share (being the same as the Issue Price for the Subscription and the Placing) under the terms of the Open Offer, with a view to raising up to £1,973,931 (before expenses). Only Qualifying Shareholders on the Company's register of members as at the Record Date may participate in the Open Offer.

Subject to the fulfilment of the terms and conditions referred to in the Circular, Qualifying Shareholders are being given the opportunity to subscribe for Open Offer Shares at the Issue Price pro rata to their holdings of Existing Ordinary Shares on the Record Date, free of expenses, payable in full, in cash on application, on the basis of:

1 Open Offer Share for every 8 Existing Ordinary Shares

H2P and City Financial, which together own approximately 41.37 per cent. of the Existing Ordinary Shares and have participated in the Subscription and the Placing respectively, have undertaken not to subscribe for any Open Offer Shares in the Open Offer and so their Open Offer Entitlements will be made available to Qualifying Shareholders under an excess application facility.

The Open Offer is conditional, amongst other things, upon Admission of the Open Offer Shares becoming effective by not later than 8:00 a.m. on 18 January 2018 (or such later time and/or date as the Company may determine, being not later than 8:00 a.m. on 18 February 2018). Accordingly, if such conditions are not satisfied, or, if applicable, waived, the Open Offer will not proceed and any Open Offer admitted to CREST will thereafter be disabled.

The expected timetable of principal events in relation to the Subscription, Placing and Open Offer, as first announced by the Company on 19 December 2017 is as set out below.

The dates and timing of the events in the above timetable may be subject to change at the absolute discretion of the Company. If any of the above times or dates should change, the details of the revised times and / or dates will be notified to AIM and, where appropriate, to shareholders.

Use of Proceeds and Cash Position

As at 30 November 2017, the Company held unaudited cash on the balance sheet as at of approximately US$2.5 million. This balance excludes approximately US$3 million of cash due on completion of the previously announced Italian transactions with Rockhopper Exploration Plc and H2P, forecast to complete in the first quarter of 2018.

The gross proceeds of the Fundraising of approximately £12.3 million (equivalent to approximately US$16.5 million) are intended to be applied as follows:

§ US$15 million to be spent on the winter and summer development programmes during 2018 in Canada;

§ US$1.2 million for general working capital purposes; and

§ US$0.3 million incurred in respect of professional legal, financial advisory and broking fees relating to the Proposals.

The Company proposes to undertake two capital investment work programmes during 2018, a winter programme in the first quarter of the year and a summer programme during the third quarter. The investment will focus on two key projects, the first being the workover and BlueSpark stimulation of existing wells, which still have production potential. These only require the replacement of facilities and equipment such as rods, well tubing and pumps. The second key area for investment will be the drilling of sidetracks from existing wells, into new areas of previously drilled reefs which still have significant levels of oil in place. The Company expects that the proceeds of the Fundraising combined with cashflow will enable Canada to be self funding.

4. Relationship Agreement

On completion of the Proposals, H2P will own a minimum of 56.53 per cent. of the Enlarged Issued Share Capital (assuming the maximum number of Placing Shares under the Placing are allotted, full subscription under the Open Offer and no exercise of any options or warrants prior to Admission) and will be able to exercise control over the Company. H2P has therefore entered into a relationship agreement with the Company and SP Angel to regulate the relationship between the Company and H2P and ensure that the management of the Company can be conducted independently of the interests of H2P.

Pursuant to the Relationship Agreement, H2P has agreed, amongst other things, that: (i) certain material transactions, agreements and arrangements between the Group on the one hand and H2P and/or its associates on the other will be made on an arm's length basis and on normal commercial terms and shall be approved solely by directors independent of H2P; (ii) there are and remain at all times a majority of directors of the Company which are independent of H2P; and (iii) save in certain circumstances, neither H2P nor any of its associates shall seek to procure or vote on any resolution to cancel the Company's admission to trading on AIM without the prior approval of the directors of the Company who are independent of H2P (save in the event of a general offer made to Shareholders for the entire issued share capital of the Company, a reverse takeover (as defined by the AIM Rules) or in relation to a proposal to admit the Ordinary Shares to trading on the main market of the London Stock Exchange).

The Company has granted H2P the right under the Relationship Agreement to nominate up to two persons to be appointed as non-executive directors of the Company. In addition, the Company has agreed not to allot or issue any new voting shares (so as to dilute the percentage of the voting rights in the Company in which H2P is interested) without first offering H2P the opportunity to subscribe for further voting shares so as to maintain the percentage of the voting rights in which H2P is interested.

5. Related Party Transactions

H2P and City Financial are substantial shareholders of the Company and are therefore regarded as related parties as defined by the AIM Rules. The Acquisition and the Subscription by H2P and City Financial's participation in the Placing are deemed related party transactions for the purposes of Rule 13 of the AIM Rules. The Independent Directors, being Jonathan Murphy, Keith Bush, Nicholas Morgan, Paul Lafferty, and Iain Lanaghan consider, having consulted with SP Angel, the Company's nominated adviser, that the terms of the Acquisition and the Subscription by H2P and City Financial's participation in the Placing are fair and reasonable insofar as Shareholders are concerned.

6. Takeover Code

The Takeover Code is issued and administered by the Panel. The Takeover Code applies to all takeover and merger transactions, however effected, where the offeree company is, inter alia, a listed public company incorporated in the United Kingdom. The Company is such a company and Shareholders are entitled to the protections afforded by the Takeover Code.

Under Rule 9 of the Takeover Code, any person who acquires an interest in shares (as defined in the Takeover Code) which, taken together with shares in which he and persons acting in concert with him are already interested, carry 30 per cent. or more of the voting rights is required to make a general offer to all the remaining shareholders to acquire their shares.

Rule 9 of the Takeover Code also provides, inter alia, that where any person, together with persons acting in concert with him, is interested in shares which in aggregate carry not less than 30 per cent. of the voting rights of a company but is not interested in shares carrying more than 50 per cent. of that company's voting rights and such person, or any person acting in concert with him, acquires an interest in any additional shares in that company which increases the percentage of the shares carrying voting rights in which he is interested, such person is normally obliged to make a general offer in cash to all other shareholders of that company to acquire the balance of the equity share capital of the company within the preceding 12 months.

An offer under Rule 9 must be made in cash (or with a full cash alternative) at a price not less than the highest price paid by the person required to make the offer, or any person acting in concert with him, for any interest in shares of the company during the 12 months prior to the announcement of the offer.

Under the Takeover Code, a concert party arises where persons who, pursuant to an agreement or understanding (whether formal or informal), co-operate to obtain or consolidate control (as defined below) of a company or to frustrate the successful outcome of an offer for a company. Control means a holding, or aggregate holdings, of shares carrying 30 per cent. or more of the voting rights of the company, irrespective of whether the holding or holdings give de facto control.

As at the date of this announcement, H2P holds an interest in 94,390,000 Ordinary Shares representing 29.89 per cent. of the Existing Ordinary Shares and voting rights of the Company. Following implementation of the Proposals, H2P will have a maximum interest in 376,686,081 Ordinary Shares which will represent 60.09 per cent. of both the Enlarged Issued Share Capital and total voting rights of the Company (assuming no take-up of the Open Offer occurs and no Open Offer Shares are issued).

7. Waiver of obligations under Rule 9 of the Takeover Code

As a consequence of the issue of the Consideration Shares and the Subscription Shares, H2P would normally be required to make a general offer to Shareholders pursuant to Rule 9 of the Takeover Code.

In accordance with Note 1 on the Notes on the Dispensations from Rule 9, the Panel has been consulted and has agreed, subject to the Whitewash Resolution being passed by the Independent Shareholders (on a poll) at the General Meeting, to waive the requirement that would otherwise arise under Rule 9 of the Takeover Code as a result of the issue of the Consideration Shares and Subscription Shares to H2P. The Whitewash Resolution will be passed if approved by a simple majority of votes cast by Independent Shareholders on a poll.

8. Independent advice provided to the Board

The Takeover Code requires the Board to obtain competent independent advice regarding the merits of the transaction which is the subject of the Whitewash Resolution, the increase of H2P's controlling position and the effect it will have on Shareholders generally. Accordingly, SP Angel, as the Company's financial adviser, has provided formal advice to the Independent Directors regarding the Proposals. SP Angel confirms that it is independent of H2P and has no commercial relationship with it.

9. Application for Admission

Application will be made to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on AIM conditional on the Resolutions being passed at the General Meeting. The Placing Shares, the Subscription Shares and the Consideration Shares are expected to be admitted to AIM and commence trading at 8:00 a.m. on 8 January 2018 and the Open Offer Shares are expected to be admitted to AIM and commence trading at 8:00 a.m. on 18 January 2018.

The New Ordinary Shares and the Consideration Shares will rank pari passu in all respects with the Existing Ordinary Shares including the right to receive all dividends and other distributions declared, paid or made after the date of issue. The Placing, which is not underwritten or guaranteed, is conditional, inter alia, upon completion of the Acquisition and the passing of the Resolutions.

10. General Meeting

The General Meeting will be held at the offices of Fieldfisher LLP, 9th Floor, Riverbank House, 2 Swan Lane, London EC4R 3TT at 11:00 a.m. on 5 January 2018 to consider and, if thought appropriate, pass the Resolutions summarised below.

If any of the Resolutions are not approved by Shareholders at the General Meeting, the Proposals will not complete and the Company will therefore be required to seek alternative sources of finance which may or may not be forthcoming.

Resolution 1 - Approval of the Waiver

Resolution 1 will be proposed as an ordinary resolution. Under Resolution 1, conditional on the passing of Resolutions 2 and 3 below, approval is sought for the Waiver in accordance with the requirements of the Takeover Code, Resolution 1 shall be taken on a poll of Independent Shareholders. H2P and City Financial may not vote on the Whitewash Resolution (Resolution 1) at the General Meeting.

Resolution 2 - Authority to allot New Ordinary Shares

Resolution 2 will be proposed as an ordinary resolution of the Company. The Directors will be seeking authority in accordance with section 551 of the Companies Act to allot:

(a) up to 350,474,710 New Ordinary Shares (being the maximum required for the purposes of issuing the Placing Shares, the Subscription Shares, the Consideration Shares and the Open Offer Shares) and representing approximately 111 per cent. of the Existing Ordinary Shares; and

(b) after allowing for the issue of up to 350,474,710 New Ordinary Shares to be issued pursuant to the Fundraising and Acquisition a further 222,101,249 Ordinary Shares (representing one third of the Company's Enlarged Share Capital) (assuming full take-up of the Open Offer).

Resolution 3 - Disapplication of pre-emption rights

The provisions of section 561(1) of the Companies Act to the extent that they are not disapplied, confer on shareholders rights of pre-emption in respect of the allotment of equity securities which are, or are to be, paid up wholly in cash. It is proposed that the level of the general disapplication of statutory pre-emption rights previously available to the Directors (approximately 10 per cent. of the Company's Enlarged Share Capital) be maintained following the Proposals.

Resolution 3 will therefore be proposed as a special resolution to disapply statutory pre-emption provisions in connection with:

(a) the allotment of up to 28,700,000 New Ordinary Shares pursuant to the Placing

(b) the allotment of up to 178,500,000 New Ordinary Shares pursuant to the Subscription

(c) the allotment of up to 39,478,629 New Ordinary Shares pursuant to the Open Offer

(d) the allotment of 103,796,081 New Ordinary Shares pursuant to the Acquisition;

(e) rights or other pre-emptive issues; and

(f) any other issues of equity securities for cash which do not, in aggregate, exceed a nominal value of £666,303.75 being 66,630,375 Ordinary Shares.

11. Irrevocable Undertakings

The Independent Directors have given irrevocable undertakings to the Company to vote in favour of all the Resolutions in respect of their own beneficial holdings of 5,090,615 Ordinary Shares, representing 1.61 per cent. of the Existing Issued Share Capital.

The Company has also received irrevocable undertakings to vote in favour of the Resolutions to be proposed at the General Meeting in respect of all Resolutions, other than the Whitewash Resolution, a total of 190,754,449 Ordinary Shares, representing 60.4 per cent of the Existing Issued Share Capital and in respect of the Whitewash Resolution, on which only the Independent Shareholders are entitled to vote, 60,116,749 Ordinary Shares, representing, in aggregate, approximately 32.5 per cent. of the Existing Issued Share Capital entitled to vote on that Resolution.

In total, therefore, the Company has received irrevocable undertakings to vote in favour of the Resolutions to be proposed at the General Meeting in respect of, in the case of all Resolutions other than the Whitewash Resolution, 195,845,064 Ordinary Shares, representing, in aggregate, approximately 62.01 per cent. of the Existing Issued Share Capital and, in respect of the Whitewash Resolution, 65,207,364 Ordinary Shares, representing 35.21 per cent. of the Existing Issued Share Capital entitled to vote on that Resolution.

12. Directors' Recommendation

The Board considers the Proposals to be in the best interests of the Company and its Shareholders as a whole.

Mr Campbell Airlie is not considered independent in respect of the Waiver by virtue of being H2P's representative on the Board and so does not feel it appropriate to make any recommendation in respect of the Resolutions. The Independent Directors, having been so advised by SP Angel as to the financial terms of the Proposals, consider that the terms of the Proposals are fair and reasonable in so far as the independent shareholders and the Company are concerned. In providing advice to the Independent Directors, SP Angel has taken into account the Independent Directors' commercial assessments. Accordingly, the Independent Directors recommend that Shareholders vote in favour of the Resolutions.

Definitions

DisclaimerSave where the context requires otherwise, terms used in the Circular shall have the same meanings when used in this announcement.

This announcement does not constitute an offer or an invitation to acquire or dispose of any securities in the United States of America, Canada, Australia, New Zealand, the Republic of South Africa, Japan or the Russian Federation or in any other jurisdiction where such offer or solicitation is unlawful (each a "Restricted Jurisdiction"). This announcement is for information purposes only and is not intended to and does not constitute or form part of any offer to sell or subscribe for or any invitation to purchase or subscribe for any securities in any jurisdiction pursuant to the Open Offer or otherwise. The Open Offer will be made solely pursuant to the terms of the Circular, which will contain the full terms and conditions of the Open Offer. Any decision in respect of, or other response to, the Open Offer should be made only on the basis of the information contained in the Circular. This announcement is an advertisement and not a prospectus. No prospectus is required to be or will published in connection with the Open Offer.

The availability of the Open Offer, and the release, publication or distribution of this announcement and any offering for sale of New Ordinary Shares, in jurisdictions other than the United Kingdom may be restricted by the laws of those jurisdictions. In particular, the Open Offer will not be made directly or indirectly in any Restricted Jurisdiction. Therefore persons into whose possession this announcement comes should inform themselves about and observe any applicable restrictions. Failure to comply with any such restrictions may constitute a violation of the securities laws of any such jurisdiction. Shareholders who are in any doubt regarding such matters should consult an appropriate independent adviser in the relevant jurisdiction without delay. To the fullest extent permitted by applicable law, the Company disclaims any responsibility or liability for the violation of such restrictions by any person. The Open Offer is not being, and will not be made, directly or indirectly, in or into or from, whether by the use of mails or any means of instrumentality (including, without limitation telephonically or electronically) of interstate or foreign commerce of, or any facilities of a national securities exchange of, any Restricted Jurisdiction and the Open Offer should not be applied for by any such use, means, instrumentality or facility from or within any Restricted Jurisdiction. Accordingly, copies of this announcement and any documentation relating to the Open Offer are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in, into or from whether by the use of mails or any means of instrumentality (including, without limitation telephonically or electronically) of interstate or foreign commerce of, or any facilities of a national securities exchange of, any Restricted Jurisdiction. Persons receiving this announcement (including without limitation custodians, nominees and trustees) must not forward, mail or otherwise distribute or send it in, into or from any Restricted Jurisdiction, as doing so may invalidate any purported application under the Open Offer. Any person (including, without limitation, custodians, nominees and trustees) who would, or otherwise intends to, or who may have a contractual or legal obligation to, forward this announcement and/or any documentation relating to the Open Offer and/or any other related document to any jurisdiction outside the United Kingdom should inform themselves of, and observe, any applicable legal or regulatory requirements of any relevant jurisdiction.

In particular, the New Ordinary Shares have not been and will not be registered under the United States Securities Act 1933, as amended, or under any of the relevant securities laws of any state or other jurisdiction of the United States of America and may not be offered, sold, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, in or into the United States of America.

SP Angel Corporate Finance LLP, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for the Company and no one else (including the recipients of this announcement) as nominated adviser and will not be responsible to anyone other than the Company for providing the protections afforded to customers of SP Angel Corporate Finance LLP or for advising any other person in relation to the matters described in this announcement.

This announcement contains certain forward-looking statements which are subject to a number of risks and uncertainties, many of which are beyond the Company's control and all of which are based on the Directors' current beliefs and expectations about future events. In some cases, these forward looking statements can be identified by the use of forward-looking terminology, including the terms "targets", "believes", "estimates, "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology. They appear in a number of places throughout this announcement and include statements regarding the intentions, beliefs or current expectations of the Company. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance. Persons receiving this announcement should not place undue reliance on forward-looking statements. Forward-looking statements are made only as of the date of this announcement. The Company expressly disclaims any obligation or undertaking to release, publicly or otherwise, any updates or revisions to any forward-looking statement contained in this announcement to reflect any change in its expectations or any change in events, conditions, assumptions or circumstances on which any such statement is based unless so required by applicable law.