IPSA.L Regulatory News (IPSA)

25th February, 2011

IPSA Group PLC

("IPSA" or "the Company")

Placing of 12.5 million new Ordinary Shares

at 8 pence to raise £1 million to fund the start-up of the Newcastle Cogeneration Plant and working capital

IPSA GROUP PLC (AIM:IPSA), the developer, owner and operator of power generation capacity in Southern Africa, announces that it has today placed a total of 12.5 million new ordinary shares of 2 pence each ("the Placing Shares") at a price of 8 pence per share to raise £1 million before expenses ("the Placing").

The Placing

The Placing Shares have been allotted subject only to admission to trading on AIM ("Admission"). Application will be made for the placing shares to be admitted for trading on AIM, with Admission expected to take place on 3rd March, 2011.

The Placing Shares will in aggregate represent just over 11.6 per cent. of the enlarged share capital of IPSA. The total enlarged issued share capital of IPSA following Admission will be 107,504,081 Ordinary Shares (the "Enlarged Issued Share Capital"). The above figure may be used by shareholders 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 Disclosure and Transparency Rules.

The Placing Shares have been placed with certain existing and new shareholders. Subscribers to the Placing include Sterling Trust Limited, which will subscribe for 10,000,000 shares at the Placing price. As a result, under the AIM Rules for Companies, the Placing is deemed to be a related party transaction. The independent directors of the Company consider, having consulted with the Company's Nominated Adviser, Execution Noble & Company Limited, that the terms of Placing are fair and reasonable insofar as shareholders of the Company are concerned.

The net proceeds of the fundraising will not provide the Company with sufficient working capital to satisfy its total medium and long term requirements, without the refinancing of the Company's loans to its subsidiary, Newcastle Cogeneration Pty. Limited ("NewCogen"), the sale of the four Turbines to repay the Standard Bank loan and other trade creditors or the extension of the repayment period under the Loan Notes, therefore as previously announced working capital remains extremely tight. An announcement will be made at the appropriate time if there is any further change in the financial condition of the Group.

Plan to commence operations at NewCogen

With the funding raised in the Placing, IPSA is planning on restarting the Newcastle cogeneration plant in March following final agreement on a gas supply contract with Spring Lights Gas (Pty.) Limited. Funds from the Placing will be used to provide the required security and deal with certain trade creditors of NewCogen and provide NewCogen with working capital over the start-up period.

With the gas agreement in place, NewCogen will be in a position to commence sales of electricity to Eskom under the medium term power purchase agreement dated 26th August 2010.

Working Capital

The bulk of the funds will be used to provide the group with working capital to re-commence operations at the cogeneration plant at Newcastle KwaZuluNatal, South Africa.

On 6th December 2010, the Company announced that Sasol Gas Limited ("Sasol Gas"), which is the monopoly gas-producer and primary supplier of gas in South Africa, has commenced legal action against NewCogen, for sums claimed under the gas supply agreement terminated in August 2009 amounting to approximately £4m. To date no further action has been taken.

Outstanding debt, accrued interest and other creditors of the Group currently amount to approximately £37m, with the bulk of funds owed by the Company.

Approximately £31m of the total outstanding debt was subject to a standstill agreement with Standard Bank PLC and Turbocare SpA following execution of an agreement on 5th March 2010, which expired on 21st February 2011. The Company is in discussions with the bank and Turbocare regarding repayment timescales for these amounts.

Change to terms of IPSA Warrants

Further to the announcement on 9 March 2010 in connection with warrants issued to certain loan note holders ( the "Loan Notes" and the "Warrants"), as a result of the Placing any shares issued under the Warrants will now be issued at 8p per share. Accordingly, Warrants for the issue of a total of 8,125,000 are outstanding and are exercisable at any time until 31st October 2013.

Richard Linnell, Chairman comments: "We were very pleased indeed to have reached terms with our new gas provider Spring Lights, and now as a result of this support of our shareholders we expect to be in a position to commence operations within the coming weeks."

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