LEK.L Regulatory News (LEK)

1 November 2013

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN, OR INTO, THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR SOUTH AFRICA.

Lekoil Limited

("Lekoil" or the "Company")

Completed placing of new Ordinary Shares at 55 pence per share

to raise approximately US$100 million (approximately £62 million)

Lekoil (AIM: LEK), the oil and gas exploration and development company with a focus on Nigeria and West Africa, announces, further to the announcement made yesterday afternoon, that it has entered into a placing agreement (the "Placing Agreement") with Mirabaud Securities LLP ("Mirabaud") and has conditionally raised, in aggregate, gross proceeds of approximately US$100 million(approximately £62 million) through the placing of, in aggregate, 113,282,000 new Ordinary Shares at a placing price of 55 pence per Ordinary Share (the "Placing Price") with certain existing and new institutional and other investors via an accelerated book-build (the "Placing").

The net proceeds of the Placing are estimated to be US$97 million (approximately £60 million) and will be used to fund the completion of drilling and testing of the Ogo-1 well and Ogo-1 ST, the future development of the OML113 licence offshore Nigeria, which contains the Aje Field, as well as for general corporate and working capital purposes, including the full repayment of the loan facility that the Company has entered into with Afren.

The Placing, which has been conducted by Mirabaud, acting as sole bookrunner and Ladenburg Thalmann, acting as US Placing Agent, pursuant to the terms and conditions as set out in Appendix I to yesterday's announcement, is conditional, inter alia, on Admission.

The Placing will be conducted in two stages, with the First Placing Shares being placed using the Directors' existing authority to allot shares for cash on a non pre-emptive basis, as granted at Lekoil's most recent EGM, and the Second Placing Shares being placed conditionally upon, inter alia, the passing of the Resolutions at the Extraordinary General Meeting to be held on 21 November 2013. A circular convening the Extraordinary General Meeting will be sent to shareholders shortly (the "Circular").

Application will be made for the First Placing Shares and the Second Placing Shares to be admitted to trading on AIM and it is currently expected that trading in the First Placing Shares and the Second Placing Shares will commence on 6 November 2013 and 22 November 2013 respectively.

Following admission to trading of the First Placing Shares, the Company will have 238,291,233 Ordinary Shares in issue. Following the issue of the Second Placing Shares, the Company will have 329,906,233 Ordinary Shares in issue.

Unless otherwise defined herein, terms are as defined in the announcement made yesterday afternoon.

Olalekan Akinyanmi, Chief Executive Officer of Lekoil, commented: "This equity raise reflects Lekoil's success in implementing the strategy, set out at the time of our IPO in May this year, to build a business focused initially on West Africa and diversified in terms of exploration, appraisal and near term production. I am delighted that our existing and new shareholders have responded so positively and look forward to continuing to grow our Company for the benefit of all shareholders and stakeholders." 

For further information, please visit www.lekoil.comor contact:

Certain statements in this Announcement are forward-looking statements which are based on the Company's expectations, intentions and projections regarding its future performance, anticipated events or trends and other matters that are not historical facts. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Given these risks and uncertainties, prospective investors are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date of such statements and, except as required by applicable law, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. The information contained in this Announcement is subject to change without notice and neither the Company nor Mirabaud assumes any responsibility or obligation to update publicly or review any of the forward-looking statements contained herein.

Past performance is not a guide to future performance.

The material in this Announcement is for informational purposes only and does not constitute an offer of securities for sale in the United States or any other jurisdiction in which such an offer or solicitation is unlawful. The Company's securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act"), or the laws of any state, and may not be offered or sold within the United States except pursuant to anexemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicablestate laws. No public offering of securities will be made inthe United States.

THIS ANNOUNCEMENT, INCLUDING THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES, CANADA, AUSTRALIA, JAPAN OR ANY JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL. PERSONS INTO WHOSE POSSESSION THIS ANNOUNCEMENT (INCLUDING THE APPENDICES) COMES ARE REQUIRED BY THE COMPANY AND MIRABAUD TO INFORM THEMSELVES ABOUT AND TO OBSERVE ANY SUCH RESTRICTIONS

MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN ARE FOR INFORMATION PURPOSES ONLY AND ARE DIRECTED ONLY AT: (A) PERSONS IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA WHO ARE QUALIFIED INVESTORS AS DEFINED IN SECTION 86(7) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000, AS AMENDED, ("QUALIFIED INVESTORS") BEING PERSONS FALLING WITHIN THE MEANING OF ARTICLE 2(1)(E) OF THE EU PROSPECTUS DIRECTIVE (WHICH MEANS DIRECTIVE 2003/71/EC AND INCLUDES ANY RELEVANT IMPLEMENTING DIRECTIVE MEASURE IN ANY MEMBER STATE) (THE "PROSPECTUS DIRECTIVE"); AND (B) IN THE UNITED KINGDOM, TO QUALIFIED INVESTORS WHO ARE PERSONS WHO (I) HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS FALLING WITHIN ARTICLE 19 OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005, AS AMENDED (THE "ORDER"); (II) ARE PERSONS FALLING WITHIN ARTICLE 49(2)(A) TO (D) ("HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC") OF THE ORDER; OR (III) ARE PERSONS TO WHOM IT MAY OTHERWISE BE LAWFULLY COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS"). THE PLACING SHARES ARE ONLY AVAILABLE TO RELEVANT PERSONS. NEITHER THE ANNOUNCEMENT NOR THESE TERMS AND CONDITIONS MAY BE ACTED UPON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY RECIPIENT OF THIS ANNOUNCEMENT WHO IS NOT A RELEVANT PERSON SHOULD TAKE NO OTHER ACTION.

Mirabaud, which is authorised and regulated by the Financial Conduct Authority, is acting for the Company in connection with the Placing and no one else and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Mirabaud or for providing advice in relation to the Placing.

Ladenburg Thalmann, a broker-dealer registered with and regulated by the U.S. Securities and Exchange Commission (the "SEC") and the U.S. Financial Industry Regulatory Authority ("FINRA"), is acting as placement agent in the United States for the Placing Shares. Ladenburg Thalmann (i) was not requested to (and did not) verify or confirm any statement contained in the document relating to the past or future financial performance, financials, operations or activities of the Company or its affiliates, the Company's products or any market information; (ii) did not conduct any investigation with respect to such information; and (iii) cannot guarantee the accuracy of such information.

The distribution of this Announcement and the Placing in certain jurisdictions may be restricted by law. No action has been taken by the Company or Mirabaud or by any of their respective affiliates or agents or brokers that would permit the Placing or possession or distribution of this Announcement or any other offering or publicity material relating to the Placing in any jurisdiction where action for that purpose is required. Persons into whose possession this Announcement becomes available are required by the Company and Mirabaud to inform themselves about, and to observe, such restrictions.

Neither the content of websites referred to in this Announcement, nor any hyperlinks on such websites is incorporated in, or forms part of, this Announcement.

Details of the Placing

The Company has conditionally placed the First Placing Shares using the Directors' existing authority to allot shares for cash on a non pre-emptive basis as granted at Lekoil's most recent EGM held on 7 August 2013. The placing of the First Placing Shares is expected to raise, in aggregate, approximately gross proceeds of US$19.1 million (approximately £11.9 million) and is conditional only on Admission, which is currently expected to occur at 8.00 a.m. on 6 November 2013. Following their Admission, the First Placing Shares will represent approximately 9.1 per cent. of the Company's then enlarged issued ordinary share capital, and they will be eligible to vote on the Resolutions.

In addition, the Company has conditionally placed the Second Placing Shares. As the Company will have utilised all of the Directors' existing authorities to allot shares generally and for cash on a non pre-emptive basis following Admission of the First Placing Shares, the Proposed Placing of the Second Placing Shares to raise, in aggregate, approximately a further US$80.9 million (approximately £50.4 million) gross is conditional upon, inter alia, the passing of the Resolutions at the Extraordinary General Meeting and Admission occurring on or before 22 November 2013 (or such later date as Mirabaud may agree, not being later than 29 November 2013). Following their Admission, the Second Placing Shares will represent approximately 27.8 per cent. of the Company's then enlarged issued ordinary share capital. The Placing Shares will be fully paid and will rank pari passu in all respects with the Company's existing Ordinary Shares.

The Placing Price represents a discount of approximately 1.3 per cent. to the closing middle market price of 56.75 pence per Ordinary Share on 31 October 2013, being the last business day prior to the announcement of the Placing.

The Placing Shares have been conditionally placed by Mirabaud as agent of the Company, with certain existing and new institutional and other investors pursuant to the Placing Agreement. Under the terms of the Placing Agreement, Mirabaud will receive commission from the Company conditional on Admission and the Company will give customary warranties and undertakings to Mirabaud in relation, inter alia, to its business and the performance of its duties. In addition, the Company has agreed to indemnify Mirabaud in relation to certain liabilities that they may incur in undertaking the Placing. Mirabaud has the right (but after, where practicable, having consulted the Company) to terminate the Placing Agreement in certain circumstances prior to Admission, in particular, in the event that there has been, inter alia, a material breach of any of the warranties. The Placing is not being underwritten.

Applications will be made for the First Placing Shares and the Second Placing Shares to be admitted to trading on AIM and it is currently expected that trading in the First Placing Shares and the Second Placing Shares will commence on 6 November 2013 and 22 November 2013, respectively.

Disapplication of pre-emption rights and share capital authorities

As mentioned above, the Directors do not currently have sufficient authoritiesin place under the Articles to undertake the Proposed Placing of the Second Placing Shares. Therefore, the Directors will be seeking additional general authority and a specific disapplication of pre-emption rights set out in the Articles to allot up to 91,615,000 new Ordinary Shares to allow the Proposed Placing of the Second Placing Shares to proceed.

In addition, the Directors will be seeking further authority to allot up to 151,000,000 new Ordinary Shares (which will represent approximately one third of the enlarged issued share capital following the Placing) together with an authority to disapply pre-emption rights in respect of up to 33,000,000 new Ordinary Shares (representing approximately 10 per cent. of the enlarged issued share capital following the Placing), subject to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or any legal or practical problems relating to such an allotment.

These existing and additional authorities will enable the Directors to carry out the Company's objectives and will ensure that the Company is in a position to pursue and take advantage of opportunities as and when they arise. In particular, the proposed authorities are intended to provide the Directors with the flexibility to issue Ordinary Shares, and rights to subscribe for Ordinary Shares, as consideration to vendors of potentially attractive assets and/or to fund the cash consideration element of such potential acquisitions. The proposed authorities will also enable the Directors to raise additional working capital to fund potential future work programmes without having to incur the time delay and cost of convening a further general meeting.

Related Party Transaction

Blackrock Investment Management ("Blackrock") currently has an 11.7 per cent. interest in the existing share capital of the Company and accordingly are classified as a substantial shareholder pursuant to the AIM Rules for Companies.

Blackrock has committed to subscribe for new Ordinary Shares as part of the Placing and accordingly the issue of Placing Shares to Blackrock constitutes a related party transaction in accordance with the AIM Rules for Companies. The Directors consider having consulted the Company's nominated adviser, Strand Hanson Limited, that the terms on which the Placing Shares will be issued to Blackrock are fair and reasonable as far as its Shareholders are concerned.

Total number of voting rights

The total number of Ordinary Shares in issue following completion of the Firm Placing and the total number of voting rights, will be 238,291,233. Lekoil does not hold any Ordinary Shares in treasury and accordingly there are no voting rights in respect of any treasury shares. The aforementioned figure of 238,291,233 Ordinary Shares 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, Lekoil under the FCA's Disclosure and Transparency Rules prior to completion of the Proposed Placing.

The total number of Ordinary Shares in issue following completion of the Proposed Placing, and the total number of voting rights, will be 329,906,233. The figure of 329,906,233 Ordinary Shares 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, Lekoil under the FCA's Disclosure and Transparency Rules following completion of the Proposed Placing

Placing statistics

Expected timetable of principal events

Note: An exchange rate of £/US$1.6050 has been assumed which was the rate prevailing on 31 October 2013 (being the last practicable day prior to the date of this announcement).

Each of the times and dates in the above timetable is subject to change without further notice. Temporary documents of title will not be issued.

-ends-