5 Oct 2015 07:00
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION
FOR IMMEDIATE RELEASE
5 October 2015
Max Petroleum Plc
("Max Petroleum" or the "Company")
Corporate update
and
Cancellation of admission to AIM
As a result of the uncertainty surrounding Max Petroleum's financial position, the Company's Ordinary Shares have been suspended from trading on AIM since 2 March 2015.
The Board of Max Petroleum regrets to announce that, due to continued uncertainty surrounding the Company's financial position, admission of the Company's Ordinary Shares to trading on AIM will be cancelled, pursuant to AIM Rule 41, with effect from 07:00 on 6 October 2015 ("Cancellation").
Notwithstanding Cancellation, Max Petroleum and AGR Energy will continue to work to satisfy all relevant conditions for completion of the Subscription.
The continued uncertainty surrounding the Company's near term financial position principally relates to:
· outstanding consent of the Kazakh antimonopoly authorities for the Subscription, which is required for completion of the Subscription; and
· continued uncertainty regarding the timing and outcome of the Rehabilitation process of the Company's wholly owned subsidiary, Samek International LLP ("Samek"), and a creditor application to commence bankruptcy proceedings.
The above, together with other uncertainties, have in turn impacted the ability of the Group's auditors currently to provide an audit opinion for the Accounts of the Group for the year ended 31 March 2015.
Corporate Update
On 14 September 2015, Samek's application for Rehabilitation was rejected by the Specialised Inter-District Economic Court of Almaty (the "Court") and Samek is in the process of filing an appeal. On the basis of legal advice, Samek is optimistic about the positive outcome to the appeal. Samek intends to present to the Court a comprehensive set of arguments in favour of the appeal, as well as a broadened support for Rehabilitation.
Notwithstanding the Court's decision on 14 September 2015, Samek continues to benefit from certain protections of the Rehabilitation process - the execution of existing Court decisions and arbitration awards against Samek (resulting from claims made by trade suppliers and a contractor) were suspended and creditor claims against Samek can only be brought within the framework of the Rehabilitation procedures (subject in each case to certain exemptions which the Max Petroleum Directors do not consider relevant in these circumstances). If the appeal is successful, Court approval of the Rehabilitation process will provide Samek with ongoing additional protection against creditors throughout the Rehabilitation period with no accrual of interest or penalties, including in respect of the Sberbank loan.
Baker Hughes Services International, Inc ("BHSI"), a creditor of Samek, is owed approximately US$0.3 million. On 9 September 2015, BHSI filed a petition to the Court seeking the bankruptcy of Samek. On 15 September 2015, a bankruptcy manager was appointed over Samek. At a Court hearing on 22 September 2015 Samek sought to suspend BHSI's bankruptcy proceeding while it appeals the Court's rejection of its application for Rehabilitation. However, Samek's motion was rejected by the Court, and the next hearing over Samek's bankruptcy is to take place on 8 October 2015. At this point, however, the appeal on Rehabilitation will have been submitted and Samek believes it highly unlikely that the Court could decide to bankrupt Samek while this appeal is being reviewed.
Intention to complete the Subscription
Max Petroleum and AGR Energy continue to work to satisfy all relevant conditions for completion of the Subscription and have entered into an amendment agreement that, inter alia, extends the Long Stop Date to 27 October 2015 and waives the condition relating to Admission of the Subscription Shares for completion of the Subscription. Cancellation will not affect the parties' efforts to complete the Subscription and AGR Energy remains committed to Max Petroleum, its assets and prospects, albeit the Company's Ordinary Shares will no longer be publicly traded on an investment exchange.
Financial position
In due course Max Petroleum and AGR Energy expect:
· antimonopoly approval to be obtained;
· completion of the Subscription to occur; and
· the Rehabilitation appeal to be heard.
On the basis of positive outcomes for the above, the Accounts of the Group for the year ended 31 March 2015 are expected to be published with a more appropriate audit opinion provided by the Company's auditors.
The above will provide additional certainty regarding the Company's financial position.
Shareholders should note previous regulatory disclosures of the Company, which have highlighted:
· Max Petroleum's working capital position: following completion of the Subscription and receipt of the Subscription proceeds, Max Petroleum is forecast to be funded until at least the end of December 2015 (subject to the assumptions stated).
· potential other issues that may impact on Max Petroleum's financing requirement in the mid- and longer term, including in respect of: its work programme commitments; the historical costs claim from the tax authorities; its crude oil delivery obligations; the outcome of the Rehabilitation creditors' meeting; and the replenishment of its Liquidation Fund.
Max Petroleum and AGR Energy will use the period until 31 December 2015 and beyond to make further progress in discussing these issues with the relevant counterparties.
Effects of Cancellation
The principal effects of the Cancellation will be that:
a) Shareholders will no longer be able to buy and sell shares in the Company through a public stock market;
b) the Company will not be bound to announce to the market material events, administrative changes or material transactions, nor to announce interim or final results; and
c) the Company would no longer be subject to the AIM Rules; Shareholders would no longer be required to vote on certain matters as provided in the AIM Rules; and the Company would no longer be subject to the provisions of the Disclosure and Transparency Rules relating to the disclosure of changes in significant shareholdings in the Company.
Effective from 07:00 on 6 October 2015, Stifel will cease to be the nominated adviser to the Company.
Cancellation may have certain tax consequences for Shareholders and those Shareholders who are in any doubt about their tax position should consult their independent financial adviser.
Corporate governance following Cancellation and completion of the Subscription
Although the way in which the Company would communicate with Shareholders would be altered by the Cancellation, AGR Energy and the Board nevertheless intend to maintain a broadly comparable standard of corporate governance and compliance as has previously existed.
Following Cancellation and completion of the Subscription, the Directors:
a) will hold an Annual General Meeting and, when required, other general meetings, in accordance with the applicable statutory requirements and the Articles;
b) will make available to all Shareholders an audited annual report and unaudited half-yearly financial reports, each prepared in accordance with IFRS standards; and
c) intend to maintain an ''Investors'' section on the Company's website at www.maxpetroleum.com providing information on any significant events, developments or operational updates in which Shareholders may be interested.
The Takeover Code and the Companies Act currently apply to the Company and will continue to apply to the Company notwithstanding the Cancellation.
AGR Energy and the Board believe that this continued approach to all Shareholders will serve to underpin good governance at the Company in the future.
Trading of Ordinary Shares
Shares will remain freely transferable after Cancellation, although there will be no market facility for dealing in the Ordinary Shares and no price will be publicly quoted for the Ordinary Shares from 6 October 2015. As such, interests in Ordinary Shares are unlikely to be readily capable of sale and where a buyer is identified, it may be difficult to place a fair value on any such sale.
Immediately following the Cancellation, the Directors do not anticipate applying to admit the Ordinary Shares to trading and/or listing on an alternative stock exchange in the foreseeable future and any transaction in Ordinary Shares undertaken after the Cancellation will only be capable of being undertaken by private sale. If any private transaction in the Ordinary Shares is effected following the Cancellation, the parties should contact the Company's registrar, Capita Registrars, so that the transaction can be registered by the Company. The Company's CREST facility will be maintained for the settlement of uncertificated share transaction.
In due course, and subject to completion of the Subscription, the Company and AGR Energy will investigate the establishment of an off-market trading facility which would enable, where possible, the matching of trades in the Ordinary Shares between willing buyers and willing sellers. However, Shareholders should be aware that any matched trade service will not offer the same liquidity as AIM as such service is not an investment exchange, nor a public market, nor is it recognised or designated by the Financial Conduct Authority or any other regulatory authority.
Further updates will be available on the Company's website: www.maxpetroleum.com
Save where the context requires otherwise, capitalised and technical terms used in this announcement shall have the same meaning as ascribed to them in the Company's circular to shareholders dated 13 August 2015.