Infra.india Regulatory News (IIP)

Infrastructure India plc

Placing and Notice of Extraordinary General Meeting

Introduction

The Board of Infrastructure India plc ("Infrastructure India" or the "Company"), the investment company focussed on Indian infrastructure assets, today announces a placing (the "Placing") of 3,089,158 ordinary shares of 1p each in the capital of the Company ("Ordinary Shares") at a price of 44p per Ordinary Share ("Placing Price"), to raise an amount of approximately £1.36 million, subject to approval at an extraordinary general meeting of the Company (the "EGM") to be held on 12 August 2010.

Background

On 15 July 2010, the Company provided shareholders with the latest update on its investments together with the unaudited net asset value per Ordinary Share ("Update").

In particular, as noted in the Update, in respect of the toll road, the Directors were pleased to report that the project is reaching its final stages of development and tolling is now anticipated to commence on the entire 125 km of the four lane road around September 2010. The Company has maintained its 26 per cent. shareholding in the toll road investment, in accordance with the wishes of the Company's shareholders, by making a further contribution of approximately £360,000 in respect of the marginal cost overrun previously reported.

As announced on 15 July 2010, the Company's unaudited net asset value ("NAV") per ordinary share as at 31 March 2010 was approximately £1.09 (audited as at 31 March 2009: £0.97) This also compares favourably to the previously reported NAV per Ordinary Share as at 30 September 2009 of £0.94.

The Directors believe that this uplift in NAV demonstrates the continued positive progress being made towards practical completion of the Company's investments.

Future prospects

The Company, through its subsidiaries ("the Group") has two investments which the Directors believe have the potential to provide shareholders with substantial value, particularly as the projects progress towards completion. However, the Directors are also mindful that, currently, the Group's portfolio comprises only two assets and the overall market capitalisation is modest. Therefore, to further reduce operating costs, the Directors have concluded that it is necessary for the Company to seek a listing on a more suitable market, such as the AIM market of the London Stock Exchange. To this end, the Directors will soon start consultations with those shareholders not already approached with regard to this proposal, which they believe will be of benefit to shareholders as a whole as it will provide the Company with greater flexibility in relation to future corporate activity as well as anticipated associated cost savings. Any such move to an alternative market will be conducted following full dialogue with all shareholders and would require, at the appropriate time, the approval of not less than 75 per cent. of shareholders voting at an extraordinary general meeting of the Company.

The Directors will continue to evaluate the prospects of the Group's current investments and any substantial further funding requirements for these projects as well as other prospective growth opportunities and, if appropriate, the Company may undertake a more substantial fundraising in the future.

Placing

As set out above, the Group has recently contributed a further amount of approximately £360,000 to the toll road project. As a result of this additional contribution, the Company faces a working capital shortfall. The decision to make the further contribution, which was made on 25 June 2010, was taken following consultation with certain shareholders who agreed to support a placing of Ordinary Shares to make good the anticipated shortfall and who are among the placees participating in the Placing.

Without undertaking the Placing, the Directors would have been placed in the position of needing to seek an additional source of finance or to achieve a full or partial exit from one or both of the Company's investments within the next six months.

Having listened to the opinions of many shareholders at the time of the general meeting requisition earlier this year, it was clear that the strong sense of shareholders representing a majority of the overall shareholding in the Company was for the Company to maintain the level of its holdings in the two existing investments. The Directors believe that maintaining such holdings to at least completion of the projects should allow shareholders to benefit from the anticipated potential uplift in valuation typically associated with the more advanced stage of the assets, when the risk premium applied to the long term revenue contracts of the projects is reduced.

The Company is, therefore, proposing to issue 3,089,158 new Ordinary Shares pursuant to the Placing at a price of 44p each. The Placing is expected to raise approximately £1.36 million, before expenses (£1.17 million, net of expenses). The new Ordinary Shares, when issued and fully paid, will rank pari passu, in all respects with the existing Ordinary Shares, including the right to all future dividends or other distributions made, paid or otherwise declared on or after the date of admission.

As a result of the Placing, those shareholders who have not participated in the Placing will have their percentage ownership in the Company reduced by approximately 8.42 per cent. and their NAV per share will be diluted by approximately £0.06 per Ordinary Share (5.06 per cent.).

Director participation in the Placing

Rupert Cottrell, Prodaman Sarwal and Timothy Walker have subscribed for new Ordinary Shares pursuant to the Placing. The table below sets out the Directors' respective interests in the share capital of the Company on 26 July 2010 (being the last practicable date prior to posting of the circular) and following completion of the Placing:

EGM

The Placing Price of £0.44 per new Ordinary Share represents a discount of 59.75 per cent. to the latest published NAV per Ordinary Share of £1.09. The Placing Price also represents a discount of 9.28 per cent. to the share price on 22 July 2010 (being the latest practicable date prior to the agreement of the Placing Price) and a discount of 11.11 per cent. to the Share Price on 24 June 2010 (being the date immediately prior to the date of the additional payment being made to the toll road project).

Therefore, shareholders are required to approve the Placing, generally, pursuant to Listing Rules 15.4.11 and 9.5.10, respectively, as the new Ordinary Shares are not being offered pro rata to shareholders and the Placing Price represents a discount to the Net Asset Value as well as a discount of more than 10 per cent. to the share price immediately prior to the date on which the Directors agreed to make the further contribution to the toll road project in anticipation of the proposed Placing.

A circular setting out further details of the Placing and containing a notice convening the EGM for 10:00am on 12 August 2010 at the Company's registered office, together with a copy of this announcement, will be posted to shareholders today.

The circular will be available on the Company's website at www.iiplc.com. A copy of the circular has also been submitted to the UK Listing Authority and will shortly be available for inspection at the UK Listing Authority's Document Viewing Facility, which is situated at The Financial Services Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS.

The Board considers that the Placing and the associated resolution put to shareholders at the EGM are in the best interests of the Company and unanimously recommends that shareholders vote in favour of the resolution as the Directors intend to do in respect of their own beneficial holdings amounting in aggregate to 75,000 ordinary shares representing 0.2 per cent. of the issued ordinary share capital as at 26 July 2010, being the last practical date prior to the making of this announcement.

Admission

Application will be made to the UKLA for the new Ordinary Shares to be listed on the Official List and to the London Stock Exchange for the new Ordinary Shares to be admitted to trading on the London Stock Exchange's main market for listed securities ("Admission"). It is expected that Admission will become effective on 13 August 2010 and that dealings for normal settlement in the new Ordinary Shares will commence at 8.00 a.m. on the same day.

-ENDS-

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