Opg Power Regulatory News (OPG)

OPG Power Ventures plc ("OPG", the "Company", or the "Group")

Placing by Cenkos Securities plc of up to 64,515,000 new Ordinary Shares of 0.0147p eachat a price of 93 pence per share

The Company is pleased to announce today that it has raised, subject to certain conditions, up to £60 million (before expenses) through the placing of up to 64,515,000 new ordinary shares by Cenkos Securities plc (the "Placing"), which will be used by the Group to fund capacity expansion and for general corporate purposes. The Group currently has 107 MW in operation and, following the Placing, will have the funding to build out a further 555 MW of capacity, which the Directors believe, positions the Group to deliver on its strategy of having 1,250 MW of operational capacity by 2015.

The Placing is conditional, inter alia, upon the passing of a special resolution by shareholders to authorise the Directors to allot the Placing Shares for cash on a non-pre-emptive basis. Accordingly, an Extraordinary General Meeting is being convened on 28 February 2011. A circular containing the details of these proposals will be posted today.

Background to and reasons for the Placing

As noted in the Company's interim results, the six month period between April 2010 and October 2010 witnessed India's industrial production growing at over 9 per cent. on an annualised basis. At the same time, the Government of India's Eleventh Five year plan, which covers the five year period to 2012, continues to see additional capacity come on stream but at slower rates than targeted. As a result, significant demand is being placed on India's infrastructure and the Indian power market continues to be characterised as one of rising demand with unmatched capacity. The Directors expect these conditions to persist over the next few years.

The Directors believe that this backdrop of power deficits is one in which OPG is well placed to create significant value for shareholders through the building of additional capacity. Accordingly, the Directors intend to increase the Company's capacity from the current 107 MW of operational capacity to 1,250 MW by 2015 through the construction of plants located in India's industrial heartlands.

The Group has commenced work on an additional 383 MW of capacity, consisting of the second 77 MW module in Chennai and the 300 MW (2 x 150MW) plant in Kutch, as well as the addition of 6MW to its gas fired 19.4MW plant. The development of these plants is progressing in line with management's expectations.

The Group's existing 19.4MW gas fired facility, its 10MW waste heat plant and its 77MW thermal plant continue to perform well and, as announced in its interim results, the Group intends to extend its Chennai plant with a further 2 x 80MW units, with commissioning expected to take place in 2013. The Directors intend to use the net proceeds of the Placing to fund the entire equity financing of this additional 160MW in Chennai and for general corporate purposes, as well as to replenish the cash resources used to fund the acquisition of the site at Karnataka, announced on 25 January 2011.

Current trading and prospects

On 25 January, OPG announced that it had acquired 120 acres of land in Karnataka with potential for the construction of a 250-300 MW power station, together with an in-situ, partially constructed 12 MW thermal power plant and associated infrastructure. The Directors expect the 12 MW plant to be commissioned during 2012 and are evaluating the development of a 250-300MW plant.

At the same time, the Group announced that it is increasing production at its 19.4MW gas plant in Tamil Nadu by a further 6MW. The necessary equipment has been ordered and the additional capacity is expected to be commissioned by June 2011.

On 17 January 2011, the Company announced that it had entered into a Memorandum of Understanding with the Government of Gujarat for the development of 5,400 MW of generation capacity, of which 1,400 MW is to be gas based. With its existing plants operating well, its additional plants under construction progressing as planned and with a strong pipeline, the Directors believe that OPG is well placed to achieve its long term goal of becoming a supplier of choice in the Indian power generation sector.

The Placing

The Company proposes to raise £60 million (before expenses) through the issue of the Placing Shares at the Placing Price, which represents a discount of approximately 5.6 per cent. to the closing middle market price of 98.5p per Existing Ordinary Share on 3 February 2011, being the last practicable date prior to the publication of this document. The Placing Shares represent approximately 18.3 per cent. of the Company's enlarged issued ordinary share capital immediately following Admission.

Application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM. It is expected that Admission will occur on 1 March 2011.

The Placing Shares will, when issued, rank pari passu in all respects with the Existing Ordinary Shares including the right to receive dividends and other distributions declared following Admission.

Further details of the Placing are contained in the circular to shareholders to be sent today.

Arvind Gupta, Chief Executive of OPG commented,

"We are delighted with the support for the Placing shown by new as well as existing investors. The funds raised will allow us to execute our planned strategy to substantially increase the number of our projects and our generating capacity at a time when India faces a significant shortfall of supply versus demand. We intend to become a supplier of choice in the Indian power sector".

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