INFA.L Regulatory News (INFA)

The information contained within this announcement is 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 via a Regulatory Information Service, this inside information is now considered to be in the public domain.

24 January 2019

InfraStrata plc

("InfraStrata" or the "Company")

Placing to raise £1.5 million

InfraStrata plc (AIM: INFA), the UK quoted company focused on the development of natural gas storage capacity, is pleased to announce that it has raised £1.5 million (before expenses) through a placing of 125,000,000 new ordinary shares of 0.01p each in the Company ("Placing Shares") at an issue price of 1.2 pence per share (the "Placing").

The Company continues to make progress with all potential equity providers for the Islandmagee gas storage project (the "Project") and detailed negotiations are underway with numerous parties who are at various stages of their due diligence and term sheet discussions. The initial review of the additional funding offer that was received in the week commencing 17 December 2018, as notified in the announcement dated 27 December 2018, has now been completed. Due to the nature of this additional potential equity provider and their indicative terms, InfraStrata has agreed that they will now proceed to the next stage and undertake detailed due diligence work. Specialist advisers have already been appointed by this potential equity provider and work has commenced, which is expected to take around six weeks.

In order to maintain the Project schedule, momentum and utilise experience and work to date, we have carried out the Placing. The Placing will provide funding for various preparation and enablement works for the Project in readiness for construction of phase one (two gas storage caverns) once the final investment decision ("FID") has been made. In particular, the net proceeds of the Placing are expected to be used for:

The Directors of InfraStrata (the "Board") consider that investing further in the Project at this stage will empower InfraStrata to negotiate a stronger equity retention position in the Project. By analysis of the critical path of planned construction activities, the Company has identified scopes of work that can de-risk the Project for potential investors, which in turn is expected to add to an increased valuation of the Project. As part of the Company's equity negotiations with all potential parties, recovering costs invested to date is one key commercial element of the deal and these additional costs will be included within that calculation.

The Board is looking to conclude equity negotiations to fund Project construction as soon possible once the latest potential equity provider has completed its due diligence. This proposed deal and eventual partner will most likely be for the life of the Project and therefore it's essential that all relevant issues are considered in detail at this stage. The Project remains on track to undertake FID by the end of the first half of this year and whilst the Company is striving to meet this target, there is no guarantee on the timing to conclude discussions with the potential equity and debt providers or that acceptable terms will ultimately be forthcoming or agreed.

Negotiations on the offtake agreement are also progressing well and are on track to link in with the Project equity provider in due course. The Company has now been able to validate all third-party assumptions in its financial models including the outline terms on which debt will be available to the Company should it be required, depending on the equity/debt ratio preference of the selected Project equity provider.

John Wood, Chief Executive Officer, commented: "Whilst considering the undertaking of an equity placing at this stage, we have analysed the effect of further dilution versus the reduction of project risk, aiming to facilitate a better equity retention position in the longer term. We have undertaken the placing on terms we believe are in the best interests of the Company at this time and I am pleased to confirm that no warrants will be issued as part of this placing. I understand that many shareholders are concerned about dilution, but we believe this placing is in the best interests of our long-term goals".

Details of the Placing

The Placing will result in the issue of 125,000,000 new ordinary shares of 0.01p each in the Company, representing approximately 9.80 per cent. of the Company's issued ordinary share capital as enlarged by the Placing. Application will be made for the Placing Shares to be admitted to trading on AIM and it is expected that their admission to AIM will take place on or around 7 February 2019 ("Admission"). The issue of the Placing Shares is conditional upon, inter alia, Admission occurring. 

The Company has entered into a Placing Agreement with Allenby Capital Limited ("Allenby Capital") under which Allenby Capital has, on the terms and subject to the conditions set out therein (including Admission), undertaken to use its reasonable endeavours to procure subscribers for the Placing Shares at the Placing price. The Placing Agreement contains certain warranties and indemnities from the Company in favour of Allenby Capital. The Placing is not being underwritten by Allenby Capital or any other person. The Placing is conditional, inter alia, upon the Placing Agreement not being terminated prior to Admission (and in any event no later than 8.00 a.m. on 21 February 2019).

The Placing Shares, when issued and fully paid, will rank pari passu in all respects with the Company's existing ordinary shares of 0.01p ("Ordinary Shares"), including the right to all dividends or other distributions declared, made or paid after the date of issue of the Placing Shares. The Placing Shares will be issued utilising existing share authorities to issue new shares on a non-pre-emptive basis.

Total Voting Rights

Upon Admission, the Company's issued share capital will consist of 1,275,195,455 Ordinary Shares with one voting right each. The Company does not hold any Ordinary Shares in treasury. Therefore, the total number of Ordinary Shares and voting rights in the Company will be 1,275,195,455. With effect from Admission, this figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the FCA's Disclosure Guidance and Transparency Rules.

Market Abuse Regulation (MAR)

MAR came into effect from 3 July 2016. Market soundings, as defined in MAR, were taken in respect of the Placing with the result that certain persons became aware of inside information, as permitted by MAR. That inside information is set out in this announcement has been disclosed as soon as possible in accordance with paragraph 7 of article 17 of MAR. Therefore, those persons that received inside information in a market sounding are no longer in possession of inside information relating to the Company and its securities.

For further information, please contact:

-ENDS-

Notes to editors:

InfraStrata is an independent gas storage company focused on the UK and Ireland. Further information is available on the Company's website: www.infrastrataplc.com 

Background on the Islandmagee Storage Project

The Islandmagee gas storage project is a proposed salt cavern gas storage facility located on Islandmagee in County Antrim, Northern Ireland. The Board of InfraStrata believes that the proposed 500 million cubic metres natural gas cavern storage facility will provide over 25% of the UK's natural gas storage once constructed. The facility will be situated adjacent to the Scotland Northern Ireland (gas) Pipeline (SNIP) and the Moyle 500 megawatt electricity interconnector. Work commenced in 2007 with the acquisition of 3D seismic data to image the Permian salt in the Larne Lough area. During 2012, planning permission was granted for the project and a gas storage licence was issued by the Utility Regulator. In 2015 a well was drilled to core the salt and confirm the technical feasibility of the project, supported in part by the European Commission. The Front End Engineering and Design (FEED) element of the project was completed in November 2018 and the FEED report was submitted to the European Union in December 2018 in accordance with the Company's grant conditions. To date approximately £13.5m has been invested in the project.

Further information is available on the company's website: www.infrastrataplc.com 

The Front End Engineering & Design (FEED) and Insitu Downhole Testing programme for the Islandmagee gas storage project is co-financed by the European Union's Connecting Europe Facility.

Disclaimer releasing the European Union from any liability in terms of the content of the dissemination materials:

"The sole responsibility of this publication lies with the author. The European Union is not responsible for any use that may be made of the information contained therein."

Information to Distributors

Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended ("MiFID II"); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures (together, the "Product Governance Requirements"), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the Product Governance Requirements) may otherwise have with respect thereto, the Placing Shares have been subject to a product approval process, which has determined that the Placing Shares are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the "Target Market Assessment"). Notwithstanding the Target Market Assessment, investors should note that: the price of the Placing Shares may decline and investors could lose all or part of their investment; Placing Shares offer no guaranteed income and no capital protection; and an investment in Placing Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Placing. Furthermore, it is noted that, notwithstanding the Target Market Assessment, only investors who have met the criteria of professional clients and eligible counterparties have been procured. For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to Placing Shares.