IGAS.L Regulatory News (IGAS)

20 Mar 2007 16:26

KP Renewables PLC20 March 2007 KP Renewables Plc ("the Company") Capital Reorganisation, Proposals for Refinancing the Company, Board Changes and Intention to Seek Relisting on AIM The Company is pleased to announce that proposals have been finalised to be putto shareholders which will enable the Company to relist its shares on the AIMMarket. The Company obtained a quotation on AIM on 29 July 2005 with a strategy toestablish a leading position in the United Kingdom renewable energy sector bydeveloping, building or acquiring a portfolio of renewable energy projects inconjunction with small to mid-sized renewable energy generators. During theperiod to May 2006, the Company made good progress in identifying suitableopportunities for development and investment, and entered into a number ofsignificant development agreements. However, since May 2006, the developmentprogramme has been restricted as a result of a shortage of funds; this shortagecan be attributed indirectly to the illness and subsequent untimely death of theCompany's Chief Executive and Founder, Dr James Richard Watkins, who was leadingthe fund raising efforts. The Board had been hopeful that it would be able to generate value from itsexisting portfolio of projects but, in view of the financial position of theCompany, there were insufficient resources to devote to these projects to bringthem to fruition. Indeed, the financial position of the Company was such that,on 21 September 2006, the Board requested that the Company's Existing OrdinaryShares be suspended from trading on AIM pending a decision on refinancing. Since the suspension, the Board has continued to seek to realise value forCreditors and Shareholders and has taken forward the proposed sale of small windfarm projects. Negotiations are continuing for their sale; however, there can beno certainty as to the outcome at this stage. They have considered a number ofother proposals to refinance the Company in its present form but none haveproceeded beyond early stage discussions. As a consequence, the Board, with the active assistance of its advisers, hasconducted a review of all the available options and concluded that the Proposalsrepresent the only route to provide some residual value for Creditors andShareholders. The Proposals will provide the Company with sufficient new workingcapital to enable it to announce its Interim Results and to meet its expectedfuture obligations and to review its portfolio of projects and, where possible,resuscitate them. Following approval of the Proposals and the proposedRefinancing, the Directors will be in a position to announce the interim resultsfor the financial period to 30 June 2006 and it is expected that the suspensionof the Company's shares from trading on AIM will be lifted. The Directors believe the Proposals will be a first step towards providing anopportunity to achieve future value for Shareholders. An Extraordinary GeneralMeeting of Shareholders has been called, to be held at 11 am on 10 April 2006,to seek approval, inter alia, for an increase in and reorganisation of theCompany's share capital, for the disapplication of statutory pre-emption rightsto enable the Proposals to be implemented and for these steps to be approved inorder to address the serious loss of capital that the Company has suffered (asdescribed under the heading Serious Loss of Capital, below). If the Proposals are approved, the Company will continue to operate in therenewable energy sector and the immediate priority of the Board will be toattempt to crystallise value from some of the existing projects in a costeffective manner for the benefit of Creditors and Shareholders. However, theDirectors recognise that the business will initially be limited in scale andthat it may be in shareholders best interests for consideration to be giveneither to a significant further fund raising to support investment in a sizableproject in the renewable energy field or to the acquisition of another business.In the latter event, this would almost certainly be considered to be a reversetakeover under the AIM Rules and would be subject to further approval byshareholders. Board Changes In preparation for the Proposals and the EGM, David Lloyd-Jacob, StephenDrummond and Paul Goodrow have resigned as directors of the Company, while DavidLindley and John Bryant will remain as directors. Peter Redmond and RichardArmstrong have agreed to join the Board, subject to the approval andimplementation of the Proposals. Peter Redmond (aged 60) has over 20 years' experience in corporate finance andsmall cap fundraising and is a particular specialist in the reconstruction andrecapitalisation of microcap companies, including Bizzbuild plc (now Optimisaplc), Weatherly International plc and Future Internet Technologies plc andassisting them to acquire new businesses. He is the CEO of the corporate financehouse, Merchant House Group Plc, and is a director of AIM-quoted WeatherlyInternational plc, Bella Media plc and Fortfield Investments plc. Richard Armstrong (aged 59) is an associate with Fiske plc, the AIM quotedstockbrokers. He is a former equity analyst with extensive experience inreconstructing and raising capital for turnaround situations especially in thequoted microcap sector, including Bizzbuild plc (now Optimisa plc), WeatherlyInternational plc and Future Internet Technologies plc He is a director of AIMquoted Fortfield Investments plc. Serious Loss of Capital As a consequence of the financial position of the Company its net assets areless than half the amount of its called up share capital. As a result, unders142 of the Act, the Company is required to convene an EGM in order to discussthe Company's financial position. The Directors consider that the Proposalsaddress this issue. The Proposals The Placing The Company has raised at least £150,000 which provides sufficient funds toaddress its immediate priorities and responsibilities to the Creditors through aconditional placing of New Consolidated Ordinary Shares at the Placing Price.The Directors anticipate receiving additional commitments to provide funds fordevelopment prior to the EGM to be held on 10 April 2007 and Shareholders willbe informed of the final amount of the Placing in due course. Immediately upon the passing of the Resolutions at the EGM the Directors intendto exercise their authority to allot the necessary number of New ConsolidatedOrdinary Shares for the purposes of the CVA and the Placing. The Placing isconditional upon the lifting of the suspension of the trading on AIM of theCompany's Existing Ordinary Shares and admission of the New ConsolidatedOrdinary Shares to trading to AIM. Company Voluntary Arrangement (CVA) Unsecured creditors are to be offered either a payment of 4p in the £ to be paidin cash or, at the option of individual creditors, a cash payment of 2p in the £plus an allotment of new ordinary shares to the equivalent value of 2p in the £at the issue price. Those creditors who choose the cash and share option will beentitled to annual dividends to be paid by the Supervisor of the CVA which willrepresent 60 per cent of the net proceeds generated from existing projects overthe first three years following the commencement of the CVA. Meetings of Creditors and Shareholders have been convened under the provisionsof the Insolvency Act 1986 for 10 am and 10.15 am, respectively, on 10 April2007, immediately prior to the EGM. The Proposals, and hence the Resolutions tobe proposed at the EGM, are dependent upon the resolutions proposed at theCreditors' and Shareholders' meetings in relation to the CVA being passed. Inthe event that such resolutions are not passed the Chairman will open, but thenadjourn the EGM and take the necessary steps which will lead to the appointmentof a liquidator. Capital Reorganisation The price at which the Company is able to raise additional capital is less thanthe current nominal value of its Existing Ordinary Shares. However, the Actprevents a company from issuing shares at a discount to the nominal value.Accordingly, it will be necessary to reorganise the share capital of the Companyto allow the Placing to take place at the proposed Placing Price. Resolutions will be proposed at the EGM to inter alia: (a) sub-divide each of the issued Existing Ordinary Shares into one NewSub-divided Ordinary Share of 0.05p and one Deferred Share of 0.95p. The NewSub-divided Ordinary Shares created will have all the rights of the ExistingOrdinary Shares. The Deferred Shares will have very limited rights whicheffectively render them economically valueless with no voting rights, althoughthey continue to represent a proportion of the Company's permanent capital untilsuch time as they are cancelled by a subsequent resolution of the holders of theCompany's ordinary shares; (b) the New Sub-divided Ordinary Shares of 0.05p each will be consolidated intoNew Consolidated Ordinary Shares of 1p each on the basis that every 20 NewOrdinary Shares will be consolidated into one New Consolidated Ordinary Share.This will have no significant effect on Shareholders but will reduce the largenumber of New Consolidated Ordinary Shares that would otherwise be in issue; and (c) subject to the resolutions concerning the Sub-division and Consolidationbeing passed, adopt new articles of association of the Company which willcontain, inter alia, the rights and restrictions attaching to the DeferredShares. Increase in share capital, authority to allot and disapplication of pre-emptionrights In addition to those resolutions described above, the following resolutions willbe put to Shareholders at the EGM: (a) that the authorised share capital of the Company be increased from theexisting £1,000,000 to £6,000,000; (b) that the Directors be granted authority to issue and allot a maximum of553,410,338 New Consolidated Ordinary Shares under section 80 of the Act; (c) that the Directors be granted authority to allot a maximum of 553,410,338New Consolidated Ordinary Shares without the application of section 89 of theCompanies Act 1985 which represents approximately 92 per cent of the totalincreased issued and unissued ordinary share capital of the Company assuming theProposals are implemented; and (d) the Directors seek the Shareholders' approval of their course of action toaddress the serious loss of capital in the Company by the recapitalisation ofthe Company under the Proposals. The Shareholders should note that the Directors are asking for the authority toissue a substantial number of shares on a non pre-emptive basis. The Board hasconsidered the Company's position carefully and after consultation with theproposed new directors it is considered appropriate that such authority shouldbe sought now in order that the Company is able to raise additional capitalwithout the need to incur the expense and delay of seeking further shareholderapproval. However, in the event of a reverse takeover, shareholder approvalwould be required. Conditions of the Proposals The Company has already received commitments from Shareholders to vote in favourof the Resolutions amounting to 76.75 per cent of the Existing Ordinary Shares.The Proposals, including the Placing, are conditional only upon the Creditorsand Shareholders approving the CVA, the lifting of the suspension of the tradingof the Company's Existing Ordinary Shares on AIM and admission of the NewConsolidated Ordinary Shares to trading to AIM. Change of Adviser Libertas Capital Corporate Finance has been appointed the Company's NominatedAdviser, in addition to its existing role as broker, with immediate effect. For further information contact John Bryant, Chairman, KP Renewables Plc Tel 07768 888359 Andrew Raca, Managing Director, Libertas Capital Tel 0207 569 9650 Oli Rayner, Director, Merchant Capital Plc Tel 0207 332 2200 This information is provided by RNS The company news service from the London Stock Exchange