Echo Energy Regulatory News (ECHO)

Echo Energy plc

("ECHO" or the "Company")

Authority to allot shares, warrants and disapply pre-emption rights

Proposed Consolidation of Ordinary SharesandPosting of Circular and Notice of General Meeting

Further to the announcement on 18 April 2017, the Company will today post to its Shareholders a circular (the "Circular") containing a notice convening a general meeting to be held at 1.00 p.m. on 22 May 2017 at the Amba Hotel, Charing Cross, The Strand, London WC2N 5HX. 

The following has been extracted without material amendment from the Circular which will be available shortly from the Company's website at www.echoenergyplc.com. The same definitions apply throughout this announcement as are applied in the Circular.

1. Introduction

On 18 April 2017, the Company announced a Latin American gas strategy focused on multi Tcf (trillion cubic feet), low cost, onshore gas piped to high value, growing markets. Simultaneously, and in support of this strategy, the Company announced a non-binding heads of terms relating to a £23M institutional funding.

Further to the announcement on 18 April 2017 of the signing of non-binding heads of terms, the Company is proposing to seek authority to allot shares pursuant to the Subscription and Warrants pursuant to the Warrant Issue.

The Company is also proposing to consolidate its Existing Ordinary Shares pursuant to the Consolidation.

2. Background to and reasons for the proposals

The Company believes that the combination of economic growth across parts of the LATAM region and the increasing forecast shortage of gas in the major markets of Brazil and Argentina, together with a historic period of regional underinvestment in the sector provides a compelling investment proposition for investors at this specific point in the cycle.

The Company therefore plans to acquire a series of assets across the region, leveraging existing pipeline infrastructure and processing capability thereby enabling any new discoveries to be brought to market quickly. The Company intends to selectively bring in pre-identified strategic partners to the business to fund and technically de-risk such assets.

The Company anticipates this Subscription will fund the commencement of its asset and portfolio acquisition strategy and now requires a General Meeting to provide the necessary authorities.

The Company's current issued share capital consists of approximately 6.1 billion Existing Ordinary Shares. The Board considers that the current issued share capital is considerably higher than similar sized companies on AIM and it believes that this negatively affects investors' perception of the Company. Accordingly, following consultation with certain of the Company's Shareholders, the Consolidation is being proposed in order to reduce the number of Ordinary Shares that are in issue to a level more in line with other comparable companies traded on AIM. The Directors believe that the Consolidation should improve the liquidity and marketability of Ordinary Shares to a range of investors, including institutional investors. The Board is confident that the Consolidation will make the Ordinary Shares a more attractive investment proposition.

3. Share Authorities

In order to effect:

(a) the Subscription;

(b) the issue of warrants pursuant to the terms of the Subscription and the Loan Note Issue; and

(c) the issue of the Initial Greenberry Warrants,

the Company has convened the General Meeting to seek appropriate shareholder authorities to enable it to effect the Subscription and the relevant issues of Warrants. In addition, the Company is seeking further general authorities to issue Ordinary Shares for cash on a non-pre-emptive basis to be limited to a maximum of 33 per cent of the Company's Enlarged Share Capital.

4. The Consolidation

At the General Meeting, the Directors are inviting Shareholders to approve a Resolution which will authorise the Consolidation. The share capital of the Company will be re-organised by consolidating all of the Existing Ordinary Shares as at close of business on 22 May 2017 into ordinary shares of 0.25 pence on the basis of one Consolidated Share for every 25 Existing Ordinary Shares, such shares having the same rights and being subject to the same restrictions (save as to nominal value) as the Existing Ordinary Shares as set out in the Articles.

Following the Consolidation, the number of warrants in issue will be adjusted in line with the ratio of the Consolidation and the exercise price of each issued warrant will be adjusted accordingly.

The Consolidation will take effect on 23 May 2017, being the date of Admission.

Application will be made for the Consolidated Shares to be admitted to trading on AIM in place of the Existing Ordinary Shares. Subject to the shareholder approval of Resolution 5, it is expected that admission to AIM will become effective and that dealings in the Consolidated Shares will commence on 23 May 2017.

Following the Consolidation, the Company's new ISIN Code will be GB00BF0YPG76 and its new SEDOL Code will be BF0YPG7.

CREST and share certificates

For shareholders who hold their shares in uncertificated form it is expected that Consolidated Shares will be credited to shareholders' CREST accounts on 23 May 2017.

Certificates representing Existing Ordinary Shares will no longer be valid if the Consolidation is approved at the General Meeting. For shareholders who hold their shares in certificated form, new share certificates in respect of the Consolidated Shares are expected to be posted by Share Registrars to certificated shareholders in their new form by 2 June 2017. The new share certificates will be sent by first class post at the risk of the shareholder.

5. General Meeting

A notice convening a General Meeting of the Company, to be held at the Amba Hotel, Charing Cross, The Strand, London WC2N 5HX on 22 May 2017 at 1:00 p.m. is set out in the Circular. At the General Meeting, the following Resolutions will be proposed:

(1) an ordinary resolution to grant authority to the Directors to allot Ordinary Shares and the Warrants pursuant to section 551 of the Act, being up to an aggregate nominal amount of £1,029,315;

(2) subject to and conditional on the passing of the resolution referred to in paragraph 1 above, a special resolution to disapply the statutory pre-emption rights contained in section 561(1) of the Act in respect of the allotment of Ordinary Shares and the Warrants with an aggregate nominal amount of up to £1,029,315;

(3) an ordinary resolution to grant a general authority to the Directors to allot up to 122,951,200 Consolidated Shares in the capital of the Company or to grant rights to subscribe for or convert any security into shares in the capital of the Company pursuant to section 551 of the Act, being up to an aggregate nominal amount of £307,378. This authority will be limited to not more than 33 per cent. of the Enlarged Share Capital. The authority will expire at the conclusion of the next Annual General Meeting of the Company;

(4) a special resolution to disapply the statutory pre-emption rights contained in section 561(1) of the Act in respect of the allotment of up to 122,951,200 equity shares with an aggregate nominal amount of up to £307,378. This authority will be limited to not more than approximately 33 per cent. of the Enlarged Share Capital. The authority will expire at the conclusion of the next Annual General Meeting of the Company; and

(5) an ordinary resolution to consolidate the Company's ordinary share capital on the basis of one Consolidated Share for every 25 Existing Ordinary Shares as at close of business on 22 May 2017.

6. Directors' recommendation

The Directors consider the Resolutions to be in the best interests of the Company and its Shareholders as a whole.

Accordingly, the Directors unanimously recommend that Shareholders vote in favour of the Resolutions to be proposed at the General Meeting.

For further information please contact:

ZAI Corporate Finance Limited - Nominated Adviser +44 (0) 20 7060 2220

John Treacy / Peter Trevelyan-Clark / Jamie Spotswood

Brandon Hill Capital Limited - Broker +44 (0) 20 3463 5000

Jonathan Evans / Oliver Stansfield

The information contained within this announcement is considered to be inside information prior to its release as defined in Article 7 of the Market Abuse Regulation No. 596/2014 and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

References to the time in this document and Notice of General Meeting are to British Summer Time (BST).

KEY STATISTICS

* This includes 1,007,583,127 warrants to be issued to Greenberry following the General Meeting pursuant to the loan agreement entered into with Greenberry on 3 March 2017.

DEFINITIONS

The following definitions apply throughout this document unless the context otherwise requires: