PGR.L Regulatory News (PGR)

7 Sep 2007 07:30

Ragusa Capital PLC07 September 2007 7 September 2007 NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTOTHE UNITED STATES OF AMERICA, AUSTRALIA, JAPAN OR THE REPUBLIC OF SOUTH AFRICA,OR THEIR TERRITORIES AND POSSESSIONS Ragusa Capital plc ("Ragusa" or "the Company") Proposed acquisition of certain assets in Argentina Proposed Subscription for 12,000,000 Subscription Shares of 10p each and 12,000,000 Subscriber Warrants Proposed change of name to Andes Energia plc and Re-admission to trading on AIM Ragusa, the Aim-quoted company, announces today that terms have been agreed forthe acquisition of certain utility assets as well as oil and gas explorationinterests in Argentina and a change of name to Andes Energia plc ("AndesEnergia") conditional on shareholder approval at the Extraordinary GeneralMeeting ("EGM"). The existing Ordinary Shares are expected to resume trading at7:30 a.m. today and a copy of the Re-admission document, today being posted toRagusa Shareholders, will be available on Ragusa's website atwww.ragusacapital.co.uk. ACQUISITION HIGHLIGHTS • The value of the initial consideration is USD 72.5 million (£36.2 million), comprising the issue of 64,888,889 Consideration Shares and 12,000,000 Vendor Warrants together with a cash payment of USD 2.4 million (£1.2 million). • The Company is proposing to raise approximately £6.5 million (before expenses) through the issue of 12,000,000 Subscription Shares and 12,000,000 Subscriber Warrants at a price of 54p per Subscription Share plus Subscriber Warrant. • Ragusa will be renamed Andes Energia on Re-admission, and will have a market capitalisation of approximately £54.5 million at the placing price of 54p; • On Completion Lance O'Neill and Paul Merchant will resign as Directors and Michael Stevens, Luis Alvarez Poli Petrungaro, Neil Bleasdale, Marcelo Comba and Nicolas Mallo Huergo will be appointed as new Directors of the Company; and • Re-admission of the New Ordinary Shares is expected to take place on Tuesday, 2 October 2007, and dealings are expected to commence in the Enlarged Share Capital on AIM with effect from 7.30am on that date. PROPOSED ASSETS TO BE ACQUIRED • 50% interest in SODEMSA which has a 51% controlling interest in EDEMSA, the main electricity distribution company in the Province of Mendoza; • Option to acquire the remaining 50% of SODEMSA; - EDEMSA has approximately 337,000 customers and employs 630 people. - Capacity of the EDEMSA distribution system is 1,151 MW and 2006 sales totalled 2,779 GWh. • 100% of Integra Oil, a newly formed company whose principal asset will be its entitlement under a Consortium Agreement to a 20 per cent. carried working interest and an option to acquire a further 3 per cent. direct working interest in all oil and gas assets acquired by, or already granted to, the Consortium of which it is a member; • 100% of Andes Oil, a recently formed company whose principal asset is its entitlement under the Royalty Agreements to a 20 per cent. royalty interest on all hydrocarbons produced under the Consortium Agreement; - The Consortium, together with the operator, Kilwer, has been awarded three exploration licences to date covering a total of seven blocks and measuring over 25,000 km2 within the San Jorge and the Neuquen basins in Argentina; and • Option to acquire 80% interest in HDS which owns 59% of HASA, the owner of the 60MW Ameghino hydro-electric power plant, located in the Province of Chubut. Lance O'Neill, Chairman, commented: "We believe that the proposed acquisitionrepresents a great opportunity for the Company and its shareholders. In additionto these very significant assets, the Company will be acquiring local expertiseand management, which should provide a strong platform on which to build asignificant energy company within South America." A Notice convening an EGM to be held at the offices of Nabarro, at Lacon House,84 Theobald's Road, London WC1X 8RW at 10 a.m. on Monday, 1 October 2007 isbeing sent to shareholders today to consider the resolutions necessary toimplement the Proposals. Enquiries: Ragusa Capital plc Lance O'Neill, Chairman T: 020 7495 5326 Nigel Duxbury, Finance Director Arbuthnot Securities James Steel T: 020 7012 2000 Antonio Bossi Bishopsgate Maxine Barnes T: 020 7562 3350Communications limited Nick Rome Arbuthnot Securities Limited, which is regulated by the Financial ServicesAuthority, is acting as nominated adviser and broker to the Company in relationto the Re-admission only and will not be responsible to any person other thanthe Company for providing the protections afforded to its customers or foradvising any other person on the contents of this announcement, the Re-admissiondocument or any other document published in connection with the Proposals. Theresponsibilities of Arbuthnot Securities Limited as the Company's nominatedadviser and broker under the AIM Rules are owed solely to the London StockExchange plc and are not owed to the Company or to any Director, ProposedDirector, Shareholder or any other person. Arbuthnot Securities Limited is notmaking any representation or warranty, express or implied, as to the contents ofthis announcement, the Re-admission Document or any other document published inconnection with the Proposals. NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTOTHE UNITED STATES OF AMERICA, AUSTRALIA, JAPAN OR THE REPUBLIC OF SOUTH AFRICA,OR THEIR TERRITORIES AND POSSESSIONS Proposed acquisition of certain assets in Argentina Proposed Subscription for 12,000,000 Subscription Shares of 10p each and 12,000,000 Subscriber Warrants Proposed change of name to Andes Energia plc and Re-admission to trading on AIM 1. Introduction The Board of Ragusa announced on 21 May 2007 that the Company had conditionallyagreed to acquire certain utility assets as well as oil and gas explorationinterests in South America. The assets are all located in Argentina andcomprise: (i) the whole of the issued share capital of Andes Electricidad S.A., a newlyformed company whose principal asset will be an indirect 50 per cent. interestin SODEMSA, a holding company with a 51 per cent. controlling interest inEDEMSA, the main electricity distribution company in the Province of Mendoza; (ii) an option to acquire the remaining 50 per cent. indirect interest inSODEMSA; (iii) certain oil and gas interests comprising: (a) the whole of the issued share capital of Integra Oil, a newly formed company whose principal asset will be its entitlement under a Consortium Agreement to a 20 per cent. carried working interest and an option to acquire a further 3 per cent. direct working interest in all oil and gas assets acquired by the Consortium of which it is a member; and (b) the whole of the issued share capital of Andes Oil, a recently formed company whose principal asset is its entitlement under the Royalty Agreements to a 20 per cent. royalty interest on all hydrocarbons produced under the Consortium Agreement; and (iv) an option (the HASA Option) to acquire an indirect controlling interest(representing a 47.2 per cent. economic interest) in HASA which owns the 60MWAmeghino hydro-electric power plant, located in the Province of Chubut. The initial consideration for the Acquisition, payable on Completion, comprisesthe issue of 64,888,889 Consideration Shares and 12,000,000 Vendor Warrantstogether with a cash payment of USD2.4 million (£1.2 million). The initialconsideration shall also be adjusted by a payment based on the Company's netcash balance at Completion, relating to the repayment to the Company prior to 31December 2007 of certain loans made by it and which could result in the furtherallotment by the Company of Ordinary Shares at the Subscription Price to a valueup to USD1 million At the Subscription Price of 54p for each Subscription Shareplus Subscriber Warrant and attributing negligible value to each SubscriberWarrant, the value of the initial consideration is USD72.5 million (£36.2million). Deferred consideration of up to an additional 252,962,962 OrdinaryShares is also payable over the next few years based on future certified oil and/or gas reserves. Under the terms of the Stock Purchase and AssignmentAgreement, the Vendors may direct other parties to receive the consideration andthe persons entitled to receive the consideration have the option to receivepart of the Deferred Consideration in cash. The cash element of the initial consideration will be financed out of theCompany's existing cash resources. In addition, the Company is proposing toraise an additional £6.5 million (£4.6 million net of expenses) through theissue of 12,000,000 Subscription Shares and 12,000,000 Subscriber Warrants at54p for each Subscription Share plus one Subscriber Warrant under theSubscription. Immediately following Re-admission, the Vendors will hold 64,888,889 OrdinaryShares, representing approximately 64 per cent. of the Enlarged Share Capital. The Ongoing Directors are also contemplating a second fundraising shortly afterRe-admission to fund the exercise of the option to acquire the remaining 50 percent. indirect interest in SODEMSA and other potential acquisitions. In view of its size, the Acquisition will constitute a reverse takeover underthe AIM Rules and will be, together with the Subscription and the proposedchange of name, conditional on the approval of Shareholders. 2. Background to and reasons for the Acquisition Ragusa was admitted to AIM on 15 July 2004 to establish, invest in or acquirebusinesses or companies which were considered by the Directors to have thepotential for the generation of sustainable growth and profitability in both theshort and medium term. As set out in the Company's original AIM admission document dated 12 July 2004,the key attributes the Directors were looking for in prospective acquisition orinvestment targets were: • competent management, with a track record in current market conditions of building and managing a business, and the ability to deploy and manage capital within its designated business sector; • an ability to generate revenue streams with potential for expansion; and • business strategies which complement those of the Company and which will enhance the earnings and capital growth of the combined entity. Since its admission to AIM in July 2004, the Company has spent a significantamount of time researching and evaluating opportunities of varying sizes. Duringthis time it has also made certain trading and other investments. The Directors believe that the proposed Acquisition meets the Company'sacquisition criteria and represents an attractive investment opportunity. Inaddition to the assets set out above, the Company will be acquiring localexpertise and management, which the Directors believe will provide a strongplatform on which to build a significant energy company within South America.Argentina has recovered from the 2002 financial crisis and has seen sustainedeconomic growth in the past three years. Despite this recovery, the Directorsbelieve that there is still the opportunity to acquire assets with the potentialto generate significant returns for the Company in the medium to long term atattractive valuations. Global energy markets and energy prices have increased over several years, withoil in particular hitting new highs in recent months. The Company is also takingadvantage of a new provincial oil regime established in Argentina to promoteinvestment in oil and gas exploration. The mix of assets being acquired isexpected to establish the Enlarged Group as a broad player in the energy marketsboth of Argentina and further afield in South America. The Directors believe that the combination of the Company's financial and marketexpertise with the experience of senior local management will lead to thesuccessful development of the assets being acquired and the opportunity toidentify and acquire additional assets in the future. The initial aim is tofocus on exploiting opportunities to create value from these assets while at thesame time expanding our asset portfolio through further acquisitions. 3. Background information on SODEMSA and EDEMSA SODEMSA is an investment holding company with a 51 per cent. controllinginterest in EDEMSA. Apart from its interest in EDEMSA, SODEMSA has negligibleassets and liabilities. History EDEMSA was founded by the Government of the Province of Mendoza (one of thetwenty four provinces of Argentina) in April 1998. Under a Concession Agreementdated 15 July 1998, EDEMSA was awarded an exclusive right to distributeelectricity over an area of approximately 110,000 km2 with a population of some1.2 million people. In October 1998 under the Concession Agreement, EDEMSA paidto the provincial Government a concession duty of USD30 million. The term of theConcession Agreement is 30 years, divided into three management periods of 10years each. Following the grant of the concession, EDEMSA entered into a technicalassistance agreement with Electricite de France ("EDF") in October 1998. Laterin 1998, EDF paid USD237 million for an indirect controlling stake in EDEMSAwhich it subsequently sold for an undisclosed amount in March 2005. Business EDEMSA provides a public service and its Concession Agreement takes the form ofa monopoly within defined geographic market. The EDEMSA business is highlyregulated by both local and national laws, regulations and regulatoryauthorities. The capacity of the EDEMSA distribution system is 1,151 MW and 2006sales totalled 2,779 GWh. EDEMSA has approximately 337,000 customers andcurrently employs approximately 630 people. Investment structure and option On Completion, Ragusa will acquire a 50 per cent. indirect interest in SODEMSA,representing a 25.5 per cent. economic interest in EDEMSA. The investment willbe held via various intermediate holding companies, each with negligible assetsand liabilities save for their respective investments in SODEMSA and each other. The Enlarged Group will have an option, exercisable at any time prior to 31October 2007, to acquire the remaining 50 per cent. indirect interest inSODEMSA, through the acquisition of the outstanding shares in two intermediateholding companies, for approximately USD 30 million (£15 million) in cash plus apotential earn-out. If exercised, this option will be funded out of the proceedsof a second fundraising shortly following Re-admission currently beingcontemplated by the Ongoing Directors. The other shareholders in EDEMSA are the Government of Mendoza (39.5 per cent.)and employees (9.5 per cent.). By virtue of its 51.0 per cent. shareholding,SODEMSA has the right to appoint 5 out of 9 Board members of EDEMSA. 4. Background information on the Oil and Gas interests The Argentine Oil and Gas Industry There are five hydrocarbon basins in Argentina. Approximately 50 per cent. ofthe oil reserves of Argentina are located in the San Jorge basin with a further35 per cent. located in the Neuquen basin. The Neuquen basin also accounts forapproximately 50 per cent. of the gas reserves in Argentina. Argentina had 2.5 billion barrels of proved oil reserves as of January 2007, upfrom 2.3 billion barrels in 2006 and produced an estimated 804,000 barrels perday of oil in 2006. In addition, Argentina had 16.1 trillion cubic feet ofproved natural gas reserves, the third largest in South America, as at December2006. Natural gas production in Argentina has steadily increased over the lastdecade. Consortium Agreement In March 2007, Patagonia Oil and Integra Investment entered into a ConsortiumAgreement setting out the terms under which they would participate in publicbids in Argentina and South America for permits for exploration and exploitationof hydrocarbons in certain areas. In August 2007 Integra Investment incorporatedIntegra Oil as a 100 per cent. owned subsidiary and will transfer its rights inthe Consortium Agreement to Integra Oil. As part of the Acquisition, Ragusa willbe acquiring the whole of the issued share capital of Integra Oil. Each party to the Consortium Agreement has 50 per cent. voting rights and equalauthority with respect to the administration and governance of the Consortium.In economic terms, Integra Oil will have a 20 per cent. carried working interestwith an option to acquire a further 3 per cent. direct working interest in alloil and gas assets acquired by the Consortium of which it will be a member. Where the Consortium has been awarded an exploration permit in respect of alicence block and until Patagonia Oil and Integra Oil declare that licence blockcommercial, Patagonia Oil is obliged to contribute all monetary funds requiredto comply with, and fulfil all contractual obligations imposed under, the permitsave to the extent that Integra Oil exercises its 3 per cent. option. Suchcontributions are then recouped out of any proceeds before distribution ofprofit shares to the two partners. Royalty Agreements The parties to the Consortium Agreement have entered into Royalty Agreementswith Andes Oil, under which Andes Oil will earn a 20 per cent. royalty on thevalue of the marketed hydrocarbons produced in each of the licence blocksdetailed below, after deduction of the Government's royalty and the carriedparticipation of the operator. As part of the Acquisition, Ragusa will beacquiring the whole of the issued share capital of Andes Oil. Under the Consortium Agreement the parties have also agreed to enter intoroyalty agreements, in substantially the same form as the Royalty Agreements,for all licences that in the future might be awarded to the Consortium in SouthAmerica. Oil and Gas licences already held by the Consortium UTEs consisting of the Consortium and the operator, Kilwer, have been awardedthree exploration licences to date covering a total of seven blocks. Explorationlicences run for an initial period of three years followed by a secondexploration period of two years and a final exploration period of one year. Atthe end of each exploration phase, 50 per cent. of the remaining area must berelinquished or converted into an exploitation or evaluation concession. Exploitation concessions are granted for a period of 25 years although anextension of 10 years may be granted under terms and conditions to beestablished at the time of the extension. The first licence was awarded on 19 July 2006 and covers three licence blocks,Confluencia, San Bernardo and Pampa Salamanca Norte. These three licence blockslie within the San Jorge basin in Argentina and total 4,517 km2. The second licence was awarded on 28 December 2006 and covers a further threelicence blocks, Rio Senguerr, Buen Pasto and Sierra Cuadrada. These licenceblocks also lie within the San Jorge basin and total 20,418 km2. The third licence was awarded on the 28 February 2007 and covers the Laguna ElLoro licence block in the Neuquen basin in Argentina and measures 505 km2. 5. Background information on HASA HASA has a 50 year concession, which commenced in 1994, to operate the Ameghinohydro power plant located in the Chubut Province. The plant, which wascommissioned in 1968, has installed capacity of 60 MW and produced approximately334 GWh of electricity in 2006 and currently employs 26 staff. The Ameghino hydro plant currently has low annual capital expenditure andmaintenance requirements. As a result, electricity is generated by the Ameghinoplant at a cost of around ARS 25 per MWh. Under the HASA Option the Enlarged Group will have an option to acquire up to 80per cent. of HDS which in turn owns 59 per cent. of HASA. The option isexercisable at any time up to 31 October 2007 in return for the issue of6,203,703 Ordinary Shares and payment of USD6.5 million (£3.25 million) in cash.Subject to completion of outstanding due diligence, the Ongoing Directorscurrently anticipate that Ragusa will exercise the HASA Option shortly afterRe-admission and finance the cash element of the exercise price out of theproceeds raised through the Subscription. Assuming exercise of the HASA Option, the remaining 20 per cent. of the sharesin HDS will be held by electricity distribution cooperatives. The othershareholders in HASA are the Province of Chubut (39 per cent.) and the employees(2 per cent.). For the year ended 31 December 2006, HASA made an audited profit before tax ofUSD3.7 million on turnover of USD6.7 million. As at 31 December 2006, HASA hadaudited net assets of USD19.1 million and net current assets of USD1.6 million. 6. Financial information on the Company Set out below is a summary of the audited results of the Company for the periodended 31 March 2005, year ended 31 March 2006 and the nine months ended 31December 2006. Period ended Year ended Nine months ended 31 March 2005 31 March 2006 31 December 2006 GBP GBP GBPOperating loss (192,233) (68,646) (224,918)(Loss) / profitbefore tax (13,047) 147,979 (73,153)Net assets 5,396,193 5,472,711 5,440,763Cash and cash equivalents 4,865,081 4,533,522 3,904,927 The reporting currency of the Enlarged Group will be USD. As at 31 December2006, the exchange rate was USD 1.9591 = £1, with an average exchange rate forthe year then ended of USD 1.84295 = £1. 7. Financial information on SODEMSA Set out below is a summary of the audited consolidated results for SODEMSA forthe three years ended 31 December 2006. Year ended Year ended Year ended 31 December 2004 31 December 2005 31 December 2006 ARS ARS ARSRevenue 204,665,841 251,237,199 300,388,983Operating loss (21,265,023) (6,387,756) (7,064,253)Loss before tax (56,119,664) (62,891,922) (68,779,257)Net assets / (liabilities) 294,736,748 222,659,070 165,011,951Net cash/(borrowings) (361,948,179) (422,485,572) (482,872,229) The principal operating company within the Enlarged Group will be EDEMSA, the 51per cent. owned subsidiary of SODEMSA. The devaluation of the ARS following the 2001/02 political and economic crisisin Argentina significantly increased the cost, in ARS terms, of servicingEDEMSA's USD denominated debt. In July 2002, EDEMSA ceased paying principal andinterest on its existing debt and a default was declared. On 28 March 2007,EDEMSA completed the restructuring of its financial debt. Under a DebtRestructuring Agreement, which was unanimously approved by the then debtholders, approximately USD 108 million of debt was exchanged for new series A,B, and D Notes (the "Notes") and D Certificates (the "Certificates") with theNotes quoted on the Buenos Aires Stock Exchange, a further USD 16.7 million ofdebt was redeemed for cash at 42 cents per USD 1 of face value and USD 54.2million of interest was waived. Interest on the Notes, payable quarterly, variesfrom 0 to 4 per cent. over the 12 year term with EDEMSA having the right torepay the Notes prior to redemption in the event that certain criteria are met. For the six months ended 30 June 2007, EDEMSA has traded in line withexpectations with sales of ARS 170 million compared to ARS 139 million for theprior year equivalent period. The gross margin for the six months ended 30 June2007 has improved significantly. This improvement in performance is primarilydue to a tariff increase of 12.9 per cent. implemented at the end of 2006. As aresult of the debt restructuring, which was completed in March 2007, EDEMSA willrecognise a one-off pre-tax gain in 2007 attributable to the write-back ofinterest and other related expenses of approximately ARS 270 million. As at 30June 2007, EDEMSA had total outstanding debt of ARS 212 million. As at 31 December 2006, the exchange rate was USD 1 = ARS 3.0702, with anaverage exchange rate for the year then ended of USD 1 = ARS 3.09139. 8. Current trading and prospects of the Enlarged Group Demand for electricity in Argentina has been growing at around 5 per cent. forthe last four years and the Ongoing Directors believe that the outlook for theArgentine electricity distribution market is favourable. Years ofunder-investment in this sector and restrictions on the increase in electricitytariffs, following the financial crisis, have resulted in a supply shortagewhich the Ongoing Directors believe will only be tackled by new investmentrequiring tariff increases from which EDEMSA will directly benefit. Tariff increases of 12.9 per cent. were introduced with effect from 1 August2006 and the full year impact of these will be felt in 2007. EDEMSA has alsorecently made a submission seeking further tariff increases and expects these tobe approved and become effective in the last quarter of 2007 and during 2008. Inaddition, the Ongoing Directors believe that EDEMSA has significant operatingleverage as tariff increases are implemented as well as significant scope toenhance profitability through greater efficiency, for example through thereduction of energy losses. 9. Terms of the Acquisition The principal commercial terms of the Acquisition are as set out in paragraph 1above. The initial consideration for the Acquisition will be financed partly incash and partly through the issue of Consideration Shares and Vendor Warrants.The Acquisition is conditional, inter alia, upon the approval of the Resolutionsby Shareholders and completion of the Proposals. 10. Details of the Subscription and Admission The Company is proposing to raise £6.5 million (£4.6 million after expenses)through the issue of 12,000,000 Subscription Shares and 12,000,000 SubscriberWarrants at 54 pence for each Subscription Share plus Subscriber Warrantpursuant to the Subscription Agreements. The net proceeds of the Subscription together with the Company's existing cashresources will be used principally to fund the cash element of the initialconsideration for the Acquisition, the expenses of the Acquisition, the exerciseof the HASA Option, the development of the Group's oil opportunities and forgeneral working capital requirements. The Subscription is being carried out by the Company. Arbuthnot is not acting asplacing agent on the Subscription but has agreed, pursuant to the terms of theIntroduction Agreement, to procure re-admission of the Enlarged Share Capital toAIM. The obligations of Arbuthnot are conditional upon, inter alia, Re-admissiontaking place by 8.00 a.m. on 2 October 2007 (or such later time and date, beingnot later than 3.00 p.m. on 16 October, as the Company and Arbuthnot shallagree). The Introduction Agreement contains provisions entitling Arbuthnot toterminate the Introduction Agreement at any time prior to Re-admission incertain circumstances. 11. Details of the Consideration Shares and Subscription Shares The Consideration Shares will be issued fully paid and will, in aggregate,represent approximately 64 per cent. of the Enlarged Share Capital. TheSubscription Shares will be issued fully paid and will, in aggregate, representapproximately 12 per cent. of the Enlarged Share Capital. The marketcapitalisation of the Enlarged Share Capital at the Subscription Price will beapproximately £54.5 million. Upon Re-admission, the Directors and Proposed Directors will hold, in aggregate,9,056,667 Ordinary Shares (representing approximately 9.0 per cent. of theEnlarged Share Capital) and 5,889,041 warrants (representing approximately 17.1per cent. of the total warrants then outstanding). The New Ordinary Shares to be issued under the Subscription and as considerationunder the Stock Purchase and Assignment Agreement will, on Re-admission, rankpari passu in all respects with the Existing Ordinary Shares, including theright to receive all dividends and other distributions thereafter declared, madeor paid in respect of the ordinary share capital of the Company. 12. Board and management of the Enlarged Group On Completion Lance O'Neill and Paul Merchant will resign as Directors andMichael Stevens, Luis Alvarez Poli Petrungaro, Neil Bleasdale, Marcelo Comba andNicolas Mallo Huergo will be appointed as new Directors of the Company. Accordingly, the Board immediately following Completion will consist of: - Michael Stevens, Executive Chairman, aged 53. Michael is non-executive chairman of Artisan (UK) Plc and has extensive experience in the property sector in Europe and the US. He was also a founding shareholder of Iaxis Network with Bain Capital and GE and of telehouse group Digiplex with Carlyle Group and Providence. He was the former owner, Chairman and CEO of Paravision & Telecip, an owner of film libraries and feature film producer which he built into a billion dollar concern with L'Oreal/Nestle. - Luis Alvarez Poli Petrungaro, Chief Executive Officer, aged 39. Luis graduated as a Certified Public Accountant and Corporate Administrator from the Universidad Catolica Argentina in Buenos Aires. He also has a postgraduate MBA from the Instituto de Altos Estudios Empresariales IAE. Luis has 15 years of experience in capital markets, investor relations and financial restructuring. He was previously a financial director and manager in, among others, Transportadora de Gas del Sur and Petrobras (formerly Perez Companc) and has also worked for Banco Macro in the capital markets department. - Neil Bleasdale, Non-executive Director, aged 51. Neil is the Vice Chairman of EDEMSA. He is a businessman and holds a B.A. (with honours) from the University of Leeds, England. He also acts as director of Chatham S.A., Supercanal Holding S.A., Supercanal Internacional S.A., Supercanal S.A., Comunicaciones Austral S.A., DTH S.A., Grupo Vitivinicola de Tupungato S.A., Televisora del Oeste S.A., MSO Supercanal S.A., BTC S.A., Jorge Estornell S.A., and alternate director of Primera Fila S.A. - Nigel Duxbury, Chief Financial Officer, aged 48. Nigel has extensive experience both as a finance director and senior executive in small and large quoted and unquoted companies within Europe, Asia and the USA. He has a background in finance and accountancy, having qualified as a chartered accountant with Touche Ross, London. He is currently a director of a number of AIM quoted companies. - Marcelo Comba, Non-executive Director, aged 43. Marcelo graduated as a solicitor from the University of Buenos Aires in 1988 and became a Master in Business Law in 1994. After working in the legal departments of Siemens S.A. and Ferrovias SAC, he has worked since 2002 as a partner in the law firm of Aidar Bestene-Garcia Moreno & Associates. In 2004 he also became President of HASA. Marcelo will be an Independent Director. - Ricardo Nicolas Mallo Huergo, Non-executive Director, aged 37. Nicolas graduated from the Universidad Catolica Argentina in 1993 with a law degree, and obtained a Master in Law (LLM.) with honours at Northwestern University School of Law, Chicago, U.S.A, in 1999. He has been and is a director of a number of local and foreign companies. Previously, he practised as a lawyer in the firm Marval, O'Farrell & Mairal. - Keith Wills, Non-executive Director, age 56. Keith was a stockbroker for 30 years. He was Head of the European Retail Team at Goldman Sachs where he spent 15 years of his career and became Managing Director. Since leaving Goldman Sachs in 2004 he has worked as an independent consultant. Keith will be an Independent Director. The senior management of the Enlarged Group immediately following Completionwill consist of: - Philip O'Quigley, Chief Operating Officer Andes Energia Argentina S.A., aged 44. Philip holds an honours degree in Commerce from University College Dublin and is a Fellow of the Institute of Chartered Accountants in Ireland. He has spent the past 15 years working with a number of public and private companies active in natural resources ranging from oil and gas to minerals and renewable energy. He is currently a non-executive director of Glencar Mining Plc, a company trading on AIM. On Completion, Ragusa will move its Head Office and principal place of operationto Buenos Aires, Argentina, where most of the Directors will be based, whilecontinuing to maintain its Registered Office in London where the Chief FinancialOfficer will be based. Board meetings will be held outside the UK. As part of the Proposals certain of the Ongoing Directors will receive atransaction bonus. 13. Change of Company name In view of the size and nature of the Acquisition, it is proposed that, onRe-admission, the name of the Company be changed to Andes Energia plc. 14. Warrants The Company has constituted New Warrant Instruments to create and issue NewWarrants to subscribe for an aggregate of 32,600,000 Ordinary Shares to certainsenior management, the Vendors, the Subscribers and Arbuthnot of which29,550,000 New Warrants will be issued initially. All of the New Warrants areexercisable at a price of 54 pence per Ordinary Share and are exercisable duringvarious time scales from Re-admission. In the case of the Vendor Warrants andthe Subscriber Warrants, however, if a Vendor or Subscriber disposes of any oftheir respective Ordinary Shares during the first 12 months after Re-admission,their respective warrants shall lapse. In addition, the Company currently has afurther 1,796,296 warrants already in issue. 15. The City Code on Takeovers and Mergers As a public limited company registered in England and with its central place ofmanagement and control in the UK, Ragusa is currently subject to the provisionsof the City Code on Takeovers and Mergers. Following Completion, the centralplace of management and control will no longer be in the UK. As a result,following the Acquisition the, Code will not apply to any offer made toshareholders in the Enlarged Group to acquire their Shares. Ragusa Shareholders should note that, if the Acquisition is completed, they willnot receive the protections afforded by the Code in the event of a subsequentoffer to acquire their shares in the Company. 16. Lock-in arrangements The Ongoing Directors and Philip O' Quigley have agreed with Arbuthnot and theCompany not to sell, transfer or otherwise dispose of any interest in anyOrdinary Shares held by them immediately following Re-admission, other than incertain limited circumstances, for a period of 12 months following Re-admission.They have also agreed that any sale or disposal of Ordinary Shares in thesubsequent 12 months will be effected through Arbuthnot for such time as itremains the Company's broker and/or nominated adviser under the AIM Rules andoffers competitive terms for such sale or disposal. In addition, the Vendors, Commtel Holdings Corp., Jorge Aidar, Fildran and JoseLuis Manzano have agreed with Arbuthnot and the Company not to sell, transfer orotherwise dispose of any interest in any Ordinary Shares held by themimmediately following Re-admission, other than in certain limited circumstancesfor a period of 12 months following Re-admission. They have also agreed that anysale or disposal of Ordinary Shares in the subsequent 12 months will be effectedthrough Arbuthnot for such time as it remains the Company's broker and/ornominated adviser under the AIM Rules and offers competitive terms for such saleor disposal. The lock-in arrangements outlined above will apply in respect of, in aggregate,68,053,889 Ordinary Shares representing approximately 67 per cent. of theEnlarged Share Capital. 17. Extraordinary General Meeting A notice convening an Extraordinary General Meeting to be held at the offices ofNabarro, at Lacon House, 84 Theobald's Road, London WC1X 8RW at 10 a.m. onMonday, 1 October 2007 is today being posted to Shareholders. At theExtraordinary General Meeting, the following Resolutions (each sequentiallyconditional on the passing of the prior resolutions) will be proposed to: - Resolution 1: approve the Acquisition. This resolution will be taken on a poll of Shareholders; - Resolution 2: increase the authorised share capital of the Company from £10,000,000 to £50,000,000 through the creation of an additional 400,000,000 Ordinary Shares of 10p each; - Resolution 3: authorise the Board pursuant to Section 80 of the Companies Act to allot Ordinary Shares for the purposes of (i) the Acquisition, (ii) the Subscription, (iii) the Deferred Consideration, (iv) a further fundraising and (v) the HASA Option up to an aggregate nominal value of £38,605,555.5 million and otherwise than pursuant to (i), (ii), (iii), (iv) and (v) above a maximum nominal amount of £5,500,000 (representing approximately 55 per cent. of the Enlarged Share Capital); - Resolution 4: disapply the statutory pre-emption rights contained in Section 89 of the Companies Act up to an aggregate nominal value of £5,000,000 in connection with the contemplated fundraising and otherwise up to an aggregate nominal value of £3,200,000 (representing 31.7 per cent. of the Enlarged Share Capital) subject to certain limits; - Resolution 5: change the name of the Company to Andes Energia plc; and - Resolution 6: adopt the new Articles. 18. Irrevocable Undertakings Irrevocable Undertakings to vote in favour of the Resolutions have been receivedfrom the Directors in respect of 2,055,000 Ordinary Shares held by themrepresenting, at the date of this document, approximately 8.6 per cent. of thecurrent issued share capital of the Company. Irrevocable Undertakings to vote in favour of the Resolutions have also beenreceived from certain shareholders in respect of 11,669,500 Ordinary Shares inaggregate held by them representing, at the date of this document, approximately48 per cent. of the current issued share capital of the Company. 19. Re-admission document The Company is today posting a Re-admission document in connection with theabove proposals to Shareholders together with an EGM Form of Proxy for use atthe EGM. A copy of the Re-admission document will be made available from theCompany's website at www.ragusacapital.co.uk. 20. Restoration of shares to trading Trading in the Company's shares is expected to re-commence from 7.30am today. EXPECTED TIMETABLE OF PRINCIPAL EVENTS Latest time and date for receipt of EGM Form of 10.00 a.m. on Saturday, 29Proxy September 2007 Extraordinary General Meeting 10.00 a.m. on Monday, 1 October 2007 Completion of the Acquisition Tuesday, 2 October 2007 Re-admission and commencement of dealings in the 7.30 a.m. on Tuesday, 2Enlarged Share Capital on AIM October 2007 DEFINITIONS +-----------------------+---------------------------------------------------+|"Companies Act" |the Companies Act 1985, as amended |+-----------------------+---------------------------------------------------+|"Acquisition" |the proposed acquisition of certain assets in South|| |America |+-----------------------+---------------------------------------------------+|"AIM" |A market operated by the London Stock Exchange |+-----------------------+---------------------------------------------------+|"AIM Rules" |the rules entitled "AIM Rules for Companies" || |published by the London Stock Exchange plc from || |time to time governing admission to, and the || |operation of, AIM |+-----------------------+---------------------------------------------------+|"Andes Oil" |Andes Oil S.A. |+-----------------------+---------------------------------------------------+|"Arbuthnot" |Arbuthnot Securities Limited, the Company's || |nominated adviser and broker |+-----------------------+---------------------------------------------------+|"ARS" |Argentine Peso |+-----------------------+---------------------------------------------------+|"Articles" |the new articles of association of the Company to || |be adopted at the EGM |+-----------------------+---------------------------------------------------+|"Board" |directors of the Company at that time |+-----------------------+---------------------------------------------------+|"Code" or "City Code" |the City Code on Takeovers and Mergers published by|| |the Panel (as amended from time to time) |+-----------------------+---------------------------------------------------+|"Company" or "Ragusa" |Ragusa Capital plc |+-----------------------+---------------------------------------------------+|"Completion" |completion of the Proposals in accordance with its || |terms |+-----------------------+---------------------------------------------------+|"Concession Agreement" |the agreement executed on 15 July 1998 between || |EDEMSA and the Provincial Government of Mendoza, || |granting a 30 year exclusive right for the || |distribution of electricity within the concession || |area |+-----------------------+---------------------------------------------------+|"Consideration Shares" |the 64,888,889 new Ordinary Shares to be issued || |pursuant to the Stock Purchase and Assignment || |Agreement |+-----------------------+---------------------------------------------------+|"Consortium" |Cliveden and Integra Investment |+-----------------------+---------------------------------------------------+|"Consortium Agreement" |the agreement dated 22 March 2007 between Patagonia|| |Oil and Integra Investment governing the || |participation by the parties in oil business |+-----------------------+---------------------------------------------------+|"Debt Restructuring |The agreement between EDEMSA and Law Debenture ||Agreement" |Trust Company of New York entered into on 28 March || |2007 |+-----------------------+---------------------------------------------------+|"Deferred |the deferred consideration relating to the ||Consideration" |Acquisition |+-----------------------+---------------------------------------------------+|"Directors" |the existing directors of the Company |+-----------------------+---------------------------------------------------+|"EDEMSA" |Empresa Distribuidora de Electricidad de Mendoza || |S.A. |+-----------------------+---------------------------------------------------+|"EGM" or "Extraordinary|the extraordinary general meeting of the Company to||General Meeting" |be held immediately after the AGM on Monday, 1 || |October 2007 |+-----------------------+---------------------------------------------------+|"Enlarged Group" |the Company and its subsidiary and associated || |undertakings following the Acquisition, including || |IADESA, MENDINVERT, SODEMSA and EDEMSA |+-----------------------+---------------------------------------------------+|"Enlarged Share |the 100,904,036 Ordinary Shares in issue ||Capital" |immediately following Re-admission |+-----------------------+---------------------------------------------------+|"Existing Shareholders"|the Shareholders immediately prior to Re-admission |+-----------------------+---------------------------------------------------+|"Form of Proxy" |The form of proxy for use at the Extraordinary || |General Meeting |+-----------------------+---------------------------------------------------+|"GBP" or "£" |Great Britain Pound |+-----------------------+---------------------------------------------------+|"GWh" |gigawatt hour, a measure of energy, usually in the || |form of electricity |+-----------------------+---------------------------------------------------+|"HASA" |Hidroelectrica Ameghino S.A. |+-----------------------+---------------------------------------------------+|"HASA Option" |the option, granted to Ketsal by certain || |individuals on 30 April 2007, to acquire shares in || |HDS |+-----------------------+---------------------------------------------------+|"HDS" |Hidroelectrica del Sur S.A |+-----------------------+---------------------------------------------------+|"IADESA" |Inversora Andina de Electricidad S.A. |+-----------------------+---------------------------------------------------+|"Integra Investment" |Integra Investment S.A. |+-----------------------+---------------------------------------------------+|"Integra Oil" |Integra Oil S.A. |+-----------------------+---------------------------------------------------+|"Introduction |the conditional agreement dated 7 September 2007 ||Agreement" |between the Company, the Directors, Proposed || |Directors and Arbuthnot, relating to re-admission |+-----------------------+---------------------------------------------------+|"Irrevocable |The irrevocable undertakings entered into by ||Undertakings" |certain Shareholders in which they have undertaken || |(subject to certain limited exceptions) to vote in || |favour of the Resolutions |+-----------------------+---------------------------------------------------+|"Ketsal" |Ketsal S.A. |+-----------------------+---------------------------------------------------+|"Kilwer" |Kilwer S.A. |+-----------------------+---------------------------------------------------+|"London Stock Exchange"|London Stock Exchange plc |+-----------------------+---------------------------------------------------+|"MENDINVERT" |MENDINVERT S.A. |+-----------------------+---------------------------------------------------+|"MW" |Megawatts, a measure of electricity power |+-----------------------+---------------------------------------------------+|"New Ordinary Shares" |The Consideration Shares and the Subscription || |Shares |+-----------------------+---------------------------------------------------+|"New Warrants" |Warrants to subscribe for New Ordinary Shares, || |constituted by the New Warrant Instruments |+-----------------------+---------------------------------------------------+|"New Warrant |The warrant instruments of the Company to be issued||Instruments" |at Re-admission in respect of the New Warrants |+-----------------------+---------------------------------------------------+|"Ongoing Directors" |the directors of the Company immediately following || |Admission, being the Proposed Directors, Nigel || |Duxbury and Keith Wills |+-----------------------+---------------------------------------------------+|"Ordinary Shares" |the ordinary shares of 10p each in the capital of || |the Company |+-----------------------+---------------------------------------------------+|"Panel" |the Panel on Takeovers and Mergers |+-----------------------+---------------------------------------------------+|"Patagonia Oil" |Patagonia Oil & Gas S.A., a company formerly known || |as Cliveden Petroleo Argentina S.A. |+-----------------------+---------------------------------------------------+|"Proposals" |the proposals set out in this announcement || |including the Acquisition and the Subscription |+-----------------------+---------------------------------------------------+|"Proposed Directors" |Michael W Stevens, Luis E Alvarez Poli Petrungaro, || |Neil A Bleasdale, Marcelo A Comba, Ricardo N Mallo || |Huergo |+-----------------------+---------------------------------------------------+|"Re-admission" |Admission to trading on AIM of the Enlarged Share || |Capital becoming effective in accordance with the || |AIM Rules |+-----------------------+---------------------------------------------------+|"Resolutions" |the resolutions contained in the notice of the EGM |+-----------------------+---------------------------------------------------+|"Royalty Agreements" |The agreements, between Patagonia Oil, Integra || |Investment and Andes Oil |+-----------------------+---------------------------------------------------+|"Stock Purchase and |the conditional agreement dated 18 May 2007 (as ||Assignment Agreement" |amended) between the Company, certain persons and || |the Vendors pursuant to which the Company has || |conditionally agreed to acquire certain assets in || |Argentina |+-----------------------+---------------------------------------------------+|"Shareholders" |holders of Ordinary Shares |+-----------------------+---------------------------------------------------+|"SODEMSA" |SODEM S.A. |+-----------------------+---------------------------------------------------+|"Subscribers" |The subscribers of Subscription Shares pursuant to || |the Subscription |+-----------------------+---------------------------------------------------+|"Subscriber Warrants" |New Warrants to be granted to the Subscribers |+-----------------------+---------------------------------------------------+|"Subscription" |the conditional subscriptions for the Subscription || |Shares pursuant to the Subscription Agreements |+-----------------------+---------------------------------------------------+|"Subscription |the subscription agreements between the Company and||Agreements" |the Subscribers |+-----------------------+---------------------------------------------------+|"Subscription Price" |54p per Subscription Share and (in relation to the || |Subscription Agreements) Subscriber Warrant |+-----------------------+---------------------------------------------------+|"Subscription Shares" |the 12,000,000 new Ordinary Shares to be subscribed|| |for cash by the Subscribers pursuant to the || |Subscription |+-----------------------+---------------------------------------------------+|"United Kingdom" or |The United Kingdom of Great Britain and Northern ||"UK" |Ireland |+-----------------------+---------------------------------------------------+|"USD" |United States Dollar |+-----------------------+---------------------------------------------------+|"UTE" |Union Transitoria de Empresas, a temporary || |association of companies in a legal structure || |common in Argentina to implement a consortium |+-----------------------+---------------------------------------------------+|"Vendors" |Ketsal, Integra Investment and Andes Oil |+-----------------------+---------------------------------------------------+|"Vendor Warrants" |New Warrants to be granted to the Vendors |+-----------------------+---------------------------------------------------+ This information is provided by RNS The company news service from the London Stock Exchange