Oracle Power Regulatory News (ORCP)

Oracle Power PLC

ORACLE POWER PLC

("Oracle" or the "Company" or the "Group")

UPDATE ON MEMORANDUM OF UNDERSTANDING AND SIGNING OF CONSORTIUM AGREEMENT

· Memorandum of Understanding, currently agreed in-principle, ("MOU") expected to be signed in November 2017

· Consortium Agreement ("CA") signed

· Oracle to retain 12.1 per cent equity stake in flagship Block VI Project

· Sichuan Provincial Investment Group Co. Limited to take 78 per cent Equity Interest at the project level

· PowerChina International Group Limited to take 9.9 per cent Equity Interest at the project level

· The gross cost of the project has been previously announced as being approximately US$1.6 billion. The MOU anticipates a debt: equity ratio of 75:25

Oracle Power PLC (AIM:ORCP), the UK energy developer of a combined lignite coal mine and mine mouth power plant located in Block VI of the Thar desert in the south-eastern Sindh Province of Pakistan, is pleased to provide additional information relating to the MOU, as announced on 27 September 2017. The Company can now confirm the two Chinese State-owned Enterprises in relation to the MoU and the CA are Sichuan Provincial Investment Group Co. Limited ("SCIG") and PowerChina International Group Limited ("PowerChina"), together with Oracle ("the Parties"). The MOU is now expected to be signed by the Parties in November.

As previously announced, a total capital requirement of approximately US$1.6 billion is estimated at present. This is expected now to be firmed up in discussions with the Parties and the Parties shall continue to optimise and reduce costs where applicable. The Parties have concluded on a 75:25 debt to equity ratio in the MOU. In line with the MOU, the development expenditure incurred by Oracle up to the date of signing the MoU is expected to be capitalised and the resultant shareholding and equity value will be adjusted to reflect this.

The Company is pleased to confirm it has now signed a CA with the Parties, which runs in parallel with MOU. The CA is a formal requirement of the Private Power and Infrastructure Board ("PPIB"), the regulator of the Pakistan power industry, and is part of the process that leads to the issue by PPIB, first of the Letter of Intent ("LOI") and subsequently the Letter of Support ("LOS"). It similarly records the intention of the Parties to proceed to formal agreement to cooperate and collaborate in respect of investing in, setting up, constructing, owning and operating the flagship Thar project (the "Project"). This CA supersedes the previous consortium agreement.

About PowerChina:

PowerChina is a state-owned enterprise and is the owner of Sinohydro as well as the Hydrochina Corporation, China Renewable Energy Engineering Institute, Shandong Electric Power Company ("SEPCO") and numerous electric power design institutes and power construction companies. PowerChina provides planning, survey, design and engineering, finance, construction, installation, and operation and maintenance for power and infrastructure projects. In 2016, PowerChina had revenues of £36.8 billion, net assets of £62.2 billion and employed 187,000 staff. PowerChina has already successfully secured financial close on several CPEC (China-Pakistan Economic Corridor) listed projects and are proceeding with these power plant project constructions in Pakistan.

About SCIG:

SCIG is a Chinese state-owned investment company which invests in and manages projects in a range of sectors, including energy resources, transportation, communications, raw materials, electromechanical, agriculture and forestry. SCIG is China's fourth largest and Sichuan Province's largest local electrical power investment company, having a total install capacity of 36.04GW. In 2016, SCIG had revenues of £0.9 billion and net assets of £3.3 billion; it employs approximately 7,000 staff.

Key terms of the CA

The CA specifies that the Project will be funded by the Parties, directly into the Company's Pakistani subsidiaries and that it is proposed that SCIG, PowerChina and Oracle will have equity holdings in the Project of 78 per cent., 9.9 per cent. and 12.1 per cent. respectively. The proposed ownership remains subject to final agreement in the Definitive Agreements.

The CA further records that SCIG and PowerChina will be responsible for arranging financing through the Chinese banks.

Oracle is to remain responsible for arranging the necessary permissions within Pakistan, whilst PowerChina will be responsible for coordinating with the Chinese Government and the CPEC authorities. Oracle and PowerChina will also provide technical, engineering and commercial oversight for both the mine and the power plant. As a requirement of PPIB, the CA further records that SCIG must hold equity of at least 20% in the Company's Project subsidiaries, and collectively, all three parties must hold at least 51% of the equity in the Project subsidiaries for six years following the issue of the LOS.

Shahrukh Khan, CEO of Oracle, said:

"I am delighted that we have reached this important milestone in the development of our Project. The Company has worked tirelessly over the last few years to provide the funding framework required for such a significant project for Pakistan. We are delighted to move forward with PowerChina and SCIG, two preeminent Chinese State-owned Enterprises and leaders in their field, as our chosen partners. The structure of the financing, particularly with investment coming in at the project level, has significantly reduced the potential dilution for the Company's shareholders and has ensured the Company retains a significant interest in the Project.

The Consortium Agreement enables the project to continue to build on recent momentum and Oracle now looks forward to formally signing the in-principle agreed MOU.

We will continue to update shareholders on the progress of the Company as subsequent milestones are reached from both a financial and operational side."

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The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.