PAL.L Regulatory News (PAL)

Equatorial Palm Oil

("EPO" or "Company")

Legally Binding Joint-Venture signed with BioPalm Energy

and

Notice of General Meeting

The board of EPO (the "Board") announces that it has today posted a circular to shareholders (the "Circular") together with a notice convening a general meeting of the Company to approve the Joint Venture Agreement with BioPalm Energy Ltd. ("BioPalm Energy"). The Joint Venture Agreement is conditional on the approval of the Resolution by Independent Shareholders at the General Meeting, notice of which is set out in Part II the Circular.

Joint Venture Agreement

The Joint Venture Agreement provides for equity investment in the Joint Venture Company ("Palm Developments") of US$30.0 million (US$7.5 million from Equatorial Bio-Fuel (Guernsey) Ltd., a subsidiary of EPO, on behalf of the Company and US$22.5 million from BioPalm Energy). Furthermore, BioPalm Energy will arrange and guarantee an additional US$30.0 million loan facility to the joint venture company.

As the operator of Palm Developments, EPO will use the resulting US$60 million to accelerate its strategic development plan in respect of its c.169,000 hectare land position at Palm Bay, Butaw and River Cess.

The Company's intention is to use the capital to aim to nearly double its previous planting targets each year from 2011 to 2014. The accelerated planting schedule will have the resultant impact downstream on harvesting rates, requiring faster investment in the associated infrastructure and palm mills to process palm fruit into CPO, palm kernel oil and palm kernel cake. The accelerated planting rates should also bring forward revenues generated from expected sales of CPO and other palm products. EPO believes this will have an overall positive impact on shareholder value.

Related Party Transaction

BioPalm Energy currently holds 33,333,333 Ordinary Shares in EPO representing approximately 28.5 per cent of the issued share capital of the Company. Accordingly, BioPalm Energy is a related party for the purposes of Rule 13 of the AIM Rules and as a consequence is precluded from voting on the Resolution. The Independent Directors, having consulted with Shore Capital, the Company's nominated adviser, consider the terms of the Restructuring and Financing to be fair and reasonable insofar as the Company's Shareholders are concerned.

General Meeting

The shareholders meeting to approve this joint venture has been set for at 11.00 a.m. at 200 Strand, London WC2R 1DJ on 29 December 2010 .

Unless otherwise defined, terms used in this announcement have the defined meaning given to them in the Circular.

Michael Frayne, Chairman of Equatorial Palm Oil, commented:

"We are pleased to have BioPalm Energy as part of the Siva Group on board as a joint venture partner. In addition to helping EPO accelerate towards its development goals, the Siva Group offers, among other benefits, access to additional financing in the future, expertise in palm oil plantation development across the globe, and synergies with other projects they are developing in West Africa.

We look forward to continuing to build EPO into a major West African focused palm oil company."

Enquiries:

Proposed Restructuring and Financing of the Company's Liberian Palm Oil Projects and

Notice of General Meeting

1. Introduction

On 6 September 2010 the Company announced that it had signed a memorandum of understanding ("MOU") with BioPalm Energy to establish a US$60 million joint venture company ("Palm Developments") to hold, operate and develop the Liberian Palm Oil Projects (the "Joint Venture") . The Joint Venture Agreement is between Equatorial Bio-Fuels (Guernsey) Limited ("EBGL"), the Company's wholly owned Guernsey subsidiary, and BioPalm Energy.

The Joint Venture Agreement provides for an equity investment in Palm Developments of US$30.0 million (US$7.5 million from the Company through EBGL and the transfer of all of the issued shares of EBFM, LADC, EPOI and EPOM into Palm Developments and US$22.5 million from BioPalm Energy) with BioPalm Energy arranging and guaranteeing an additional US$30 million debt facility (together the "Restructuring and Financing").

The Joint Venture Agreement, and thus the Restructuring and Financing, is conditional upon the passing of the Resolution.

Completion of the Restructuring and Financing is conditional on the approval of the Independent Shareholders at the General Meeting, notice of which is set out at Part II of the Circular. Following Completion EPO will hold a 50 per cent. interest in EBFM and EPOM through EBGL.

BioPalm Energy currently holds 33,333,333 Ordinary Shares representing approximately 28.5 per cent of the issued share capital of the Company. Accordingly, BioPalm Energy is considered a related party and the Joint Venture is considered a related party transaction for the purposes of Rule 13 of the AIM Rules. The Independent Directors, having consulted with Shore Capital, the Company's nominated adviser, consider the terms of the Restructuring and Financing to be fair and reasonable insofar as the Company's Shareholders are concerned.

2. Background information on the Company and the Liberian Palm Oil Projects

The Group's activities and operations are carried on by or are proposed to be carried on by LFPI, LIBINCO, EBFI and LADC. The Company acts as a holding company and is the central administrative company and employer in the Group.

Corporate strategy

The objective of the Company is to become a global producer of sustainable, low-cost crude palm oil ("CPO") through three core business activities: the rehabilitation of existing palm oil plantations, the establishment of new plantations and out-grower plantation development.

The Liberian Palm Oil Projects

Prior to Admission, the Group had secured the Butaw Investment Agreement and the Palm Bay Investment Agreement for the investment, rehabilitation and participation by the Company of 88,947 hectares acreage of palm oil plantations. In addition, the Company had entered into, on 11 March 2007 and 10 July 2010, Memorandums of Intent to establish a joint venture to develop plantations on at least a further 80,000 hectares in the River Cess Area. The memorandum of understanding dated 10 July 2010 will be assigned to Palm Developments on Completion.

Since Admission, work has been commenced at the Butaw Plantation and the Palm Bay Plantation, however, no profits or turnover of the Company are currently attributable to the Liberian Palm Oil Projects.

3. Terms of the Proposed Restructuring and Financing

Under the terms of the Proposed Restructuring and Financing, subject to the Disposal Approval being received:

(a) the Company's wholly-owned Guernsey subsidiary EBGL shall establish Palm Developments which shall be a private company limited by shares incorporated in Mauritius;

(b) all of the issued shares in EBFM and EPOM (whose wholly-owned Liberian subsidiaries own the assets making up the Liberian Palm Oil Projects), which are currently wholly owned subsidiaries of the Company, shall be transferred to Palm Developments;

(c) EBGL shall, in addition to its founder share in the JVC, subscribe for additional shares in Palm Developments to the value of US$7.5 million (net of any money advanced or expenses incurred by the Company on or after 31 July 2010 in relation to EBFM or EPOM (or their respective Liberian subsidiaries);

(d) BioPalm Energy shall subscribe for a 50 per cent. shareholding in Palm Developments for US$22.5 million; and

(e) BioPalm Energy shall arrange and guarantee an additional US$30.0 million loan facility for Palm Developments.

4. Reasons for the Restructuring and Financing

The Independent Directors believe that the reasons for, and benefits of, the proposed Restructuring and Financing are as set out below:

Acceleration of the development of Liberian Palm Oil Projects

The Joint Venture Agreement provides for an equity investment in Palm Developments of US$30.0 million (US$7.5 million from EBGL on behalf of the Company and US$22.5 million from BioPalm Energy). Furthermore BioPalm Energy will arrange and guarantee an additional US$30.0 million loan facility to Palm Developments.

The resulting US$60 million investment in the 50:50 Joint Venture will enable the Company to accelerate its strategic development plan in respect of its c.169,000 hectare land position at the three plantation areas of Palm Bay, Butaw and River Cess Area. In particular, it is envisaged that the additional finance will enable the Company to:

·; embark on a more aggressive planting schedule - targeting 20,000 hectares by 2014 (compared to 11,700 hectares before the Joint Venture);

·; accelerate development of associated infrastructure to process improved harvesting rates;

·; accelerate development of outgrower programme; and

·; encourage earlier and higher realisation of cash flows resulting from sales of CPO and derivative palm products.

Mitigation of risk in respect of Liberian Palm Oil Projects

The Joint Venture allows EPO and BioPalm Energy to share the risks and rewards of developing the Liberian Palm Projects. The Directors believe that one of the most significant risks for EPO as perceived by investors has related to the long term funding and development of the Liberian Palm Projects particularly given the long lead times for palms to bear harvestable fruit and thus generate income for EPO. The Directors believed that they would be able to obtain some form of debt financing, however, in the absence of clarity on the timing, terms and quantum of the financing, the Joint Venture Agreement effectively assures financing and at a level which, the Directors believe, could otherwise be difficult to obtain should EPO attempt to access bank funding without a strategic partner. The Directors believe the benefits to the Company are significant as the Joint Venture Agreement reduces project execution risk.

Acceleration of the planting programme

The additional funding should allow EPO to achieve planting targets sooner than previously expected by management. The new schedule of expected planting rates is as follows:

The accelerated planting schedule will have the resultant impact downstream on harvesting rates, requiring faster investment in the associated infrastructure and palm mills to process palm fruit into CPO, palm kernel oil and palm kernel cake. The accelerated planting rates should also bring forward revenues generated from expected sales of CPO and other palm products. The Board believes this should have a positive impact on the project's valuation, despite the dilution of the Company's shareholding in the Liberian Palm Oil Projects.

Supportive long-term partner provides strategic benefits

In addition to the Siva Group providing the Joint Venture with the financing to scale up the new development schedule, the Directors believe the Siva Group can provide other key benefits:

·; potential access to additional future finance;

·; experience in palm oil plantation development in Asia, South American and Africa;

·; the Siva Group are currently active in other palm oil development in other countries in West Africa allowing for potential cost synergies for suppliers of equipment, vehicles and other goods; and

·; access to long-established banking relationships.

As a result, the Independent Directors unanimously believe that the proposed Restructuring and Financing is in the best interests of the Company and its Shareholders as a whole and unanimously recommend all Independent Shareholders vote in favour of the Resolution as they intend to do in respect of their own beneficial holdings of Ordinary Shares in aggregate representing 12.11 per cent. of the current issued share capital.

5. Information on the Siva Group and BioPalm Energy Limited

The Siva Group

The Siva Group was founded in 1986 by Mr. Chinnakannan Sivasankaran, and is a Chennai, India-based conglomerate valued at in excess of US$3 billion, with over 3,000 employees and operations in Property, Telecoms, Project Engineering, Shipping, Renewable Energy, Agriculture and e-education/software.

BioPalm Energy

BioPalm Energy is a Singapore incorporated company which is seeking to invest in oil palm projects and developments around the world. BioPalm Energy is a wholly owned subsidiary of Siva Ventures.

On 27 May 2010 the Company announced that it had issued 33,333,333 new Ordinary Shares to BioPalm Energy, currently representing approximately 28.5 per cent. of the Company's issued shares post-Subscription, at a price of 15p (the "Subscription Price") raising £5 million. At the time of the Subscription the Subscription Price represented a 42.9 per cent. premium over the closing price of 10.59 per Ordinary Share on 26 May 2010, being the last available business day prior to the Subscription.

Pursuant to the terms of the Subscription, BioPalm Energy was granted the right to appoint a Non-Executive Director to the board of the Company. On 27 September 2010 BioPalm Energy exercised this right, appointing Shankar Varadharajan as a non-executive director to the Board.

6. Advisory fees relating to the Joint Venture

The professional fees associated with the Restructuring and Financing have amounted to approximately £75,000.

Ragnar Capital, a firm with a connection to two former employees of EPO and St Brides Media & Finance, who were the Company's PR advisors until October, consider they are entitled to fees of approximately US$ 1.1 million in relation to this transaction. The Company does not believe that these sums are payable and the matter is being discussed between the parties.

7. The Joint Venture Agreement

Subject to receiving the Disposal Approval, following Completion, Palm Developments, in which the Company (through EBGL) will have a 50 per cent. interest, shall be responsible for the operations and development of the Liberian Palm Oil Projects. The terms of the Joint Venture Agreement and how Palm Developments shall be operated are set out in Part II of the Circular.

8. The Takeover Code requirements

Rule 9 of the Takeover Code stipulates, inter alia, that if (a) any person acquires, whether by a series of transactions over a period of time or not, an interest (as defined in the Takeover Code) in shares which (taken together with shares in which persons acting in concert with him are interested) carry 30 per cent. or more of the voting rights of a company; or (b) any person, together with persons acting in concert with him, is interested in shares which in the aggregate carry not less than 30 per cent. of the voting rights of a company but does not hold shares carrying more than 50 per cent. of such voting rights and such person, or any person acting in concert with him, acquires an interest in any other shares which increases the percentage of shares carrying voting rights in which he is interested; such person or persons acting in concert with him will normally be required to make a general offer to shareholders of that company to acquire the balance of the equity share capital of that company not held by such person or persons acting in concert with him.

An offer under Rule 9 must be made in cash (or be accompanied by a full cash alternative) and be at not less than the highest price paid by the person required to make the offer, or any person acting in concert with him, for any interest in shares of the company during the 12 months prior to the announcement of the offer.

Following Completion, BioPalm Energy will hold approximately 28.5 per cent of EPO and 50 per cent. of Palm Developments which would hold and operate the Liberian Palm Oil Projects, which are currently the Company's sole assets. The Company has consulted with the Panel and the Panel has advised that there are no Takeover Code implications resulting from the proposed Restructuring and Financing.

9 The Company's operations following the Disposal

On Completion, the Company's Ordinary Shares will continue to be traded on AIM and the Company will continue with its stated objective to become a global producer of sustainable, low-cost CPO through its interest in the Liberian Palm Oil Projects.

Following the Restructuring and Financing the Company shall continue to operate the Liberian Palm Oil Projects as "manager" under the terms of the Joint Venture Agreement a summary of which is set out in Part II of the Circular.

10 Related Party

BioPalm Energy currently holds 33,333,333 Ordinary Shares in EPO representing approximately 28.5 per cent of the issued share capital of the Company. Accordingly, BioPalm Energy is a related party for the purposes of Rule 13 of the AIM Rules and as a consequence is precluded from voting on the Resolution. The Independent Directors, having consulted with Shore Capital, the Company's nominated adviser, consider the terms of the Restructuring and Financing to be fair and reasonable insofar as the Company's Shareholders are concerned.

10. General Meeting

The General Meeting is being convened for the purpose of approving the Restructuring and Financing. A notice convening the General Meeting to be held at 10.00 a.m. on [●] 2010 at which the Resolution set out below will be put to Shareholders is set out in Part III of the Circular.

11. Document availability

An electronic copy of the shareholder circular can be accessed at the Company's website: http://www.epoil.co.uk/