PGR.L Regulatory News (PGR)

10 Dec 2007 07:00

Andes Energia PLC10 December 2007 Andes Energia plc ("Andes" or "the Company") Intended acquisition of remaining 50 per cent. of SODEM S.A. ("SODEMSA") Placing and new loan facility Andes Energia plc (AIM: AEN) is pleased to announce that it has raisedapproximately £9.1 million (US$18.5 million) gross through a placing of9,130,556 new ordinary shares at a price of 100p per share. In addition, certainof the Company's shareholders have underwritten the provision of a new US$5.0million loan facility. The net funds raised under the Placing and Loan Facilityare intended to be used to part fund the acquisition of the remaining 50 percent. of SODEMSA not already held by the Company. Highlights * Placing of 9,130,556 new ordinary shares to raise approximately £8.6 million (US$17.5 million) net of expenses • Underwritten US$5.0 million loan facility •Net proceeds of the Placing and the Loan Facility to be used to part fund the acquisition of the remaining 50 per cent. indirect interest in SODEMSA for approximately US$30 million •SODEMSA has a 51 per cent. controlling interest in Empresa Distribuidora de Electricidad de Mendoza S.A. ('EDEMSA'), the main electricity distribution company in the Province of Mendoza. Details of the Placing and Loan Facility A total of 9,130,556 new ordinary shares of 10p each in the share capital of theCompany (the 'Placing Shares') have been conditionally placed by ArbuthnotSecurities Limited ("Arbuthnot"), acting as the Company's Nominated Adviser andBroker, with certain institutional and other shareholders at a price of 100p pershare to raise approximately £9.1 million (US$18.5 million) before expenses (the'Placing'). Net proceeds after expenses will amount to approximately £8.6million (US$17.5 million). The Placing Shares will represent approximately 7.8per cent. of the then enlarged issued share capital of the Company. In addition, certain of the Company's shareholders have underwritten theprovision to the Company of a US$5.0 million senior secured loan facility (the"Loan Facility"). Under the Loan Facility funds will be available for drawdownuntil 31 January 2008, the Company will pay an interest charge of 12 per cent.per annum on funds drawn and funds drawn will be due for repayment within 12months of drawdown, with an option to extend repayment of $3 million for afurther 6 months. The loan will be secured on a 15 per cent. shareholding inSODEMSA held by the Company. The net proceeds of the Placing and Loan Facility are intended to be usedprincipally to part fund the exercise of an option (the "Option") to acquire theremaining 50 per cent. indirect interest in SODEMSA not already held by theCompany for approximately US$30 million and otherwise for general corporatepurposes. The balance of the Option exercise cost has already been funded by aUS$3 million advance payment by Andes and a US$5.8 million advance payment byKetsal S.A. ("Ketsal") which obligation is expected to be assumed by Andes uponexercise of the Option. SODEMSA has a 51 per cent. controlling interest inEDEMSA, the main electricity distribution company in the Province of Mendoza.Subject to admission of the Placing Shares to AIM becoming effective, it isexpected that the Option will be exercised and the acquisition completed by 31January 2008. Related Party Transactions The Loan Facility is being underwritten by Ketsal and Mr Jose Luis Manzano. MrJose Luis Manzano and Ketsal are members of a concert party controlling inexcess of 10 per cent. of the Company and the underwritten Loan Facilityagreement with them, if aggregated with other transactions completed during thelast twelve months, constitutes a transaction with a related party under the AIMRules. As part of the Placing, Ketsal will also subscribe for 986,728 new ordinaryshares on similar terms to other placees (the "Ketsal Placing Participation").Following completion of the Placing, Ketsal will hold 18,044,882 Ordinary Sharesin Andes representing approximately 15.4 per cent. of the then enlarged issuedshare capital. In total, the concert party of which Ketsal is a member will hold37,034,512 Ordinary Shares following the Placing representing a reducedpercentage holding of approximately 31.6 per cent. of the then enlarged issuedshare capital. The Directors of Andes (other than Luis Alvarez Poli, Neil Bleasdale andNicholas Mallo Huergo who are deemed to be members of the same concert party asKetsal and Mr Jose Luis Manzano) consider, having consulted with Arbuthnot, thatthe terms of the underwritten Loan Facility and of the Ketsal PlacingParticipation are fair and reasonable so far as the Andes shareholders areconcerned. Information on EDEMSA EDEMSA holds a concession agreement, expiring in 2028, to distribute electricitywithin the Province of Mendoza in Argentina. The capacity of the EDEMSAdistribution system is 1,151 MW and EDEMSA had unaudited sales and EBITDA forthe 9 months to 30 September 2007 of AR$253.1 million (US$84.4 million) andAR$24.6 million (US$7.9 million) respectively. EDEMSA has approximately 337,000customers and currently employs approximately 630 people. Further details inrelation to EDEMSA were included in the Company's re-admission document dated 7September 2007 and supplemental admission document dated 26 September 2007 whichare available on the Company's website at www.andesenergiaplc.com. Investment background Demand for electricity in Argentina has been growing at around 5 per cent. perannum for the last four years and the 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 Directors believe will only be tackled by new investment requiringtariff 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 the Directorsexpect these to be approved at some stage in early 2008. In addition, theDirectors believe that EDEMSA has significant operating leverage as tariffincreases are implemented as well as significant scope to enhance profitabilitythrough greater efficiency. Exercise of the Option to acquire the remaining 50 per cent. interest in SODEMSAwill consolidate Andes' control of EDEMSA and enable it to benefit fully fromits future prospects. General Application has been made to the London Stock Exchange for the Placing Shares tobe admitted to trading on AIM. The Placing Shares will rank pari passu with theexisting issued ordinary shares of 10p each in the share capital of the Company(the 'Ordinary Shares'). The Placing is conditional, inter alia, on the admission of the Placing Sharesto AIM becoming effective ('Admission'). Admission is expected to becomeeffective, and dealings in the Placing Shares to commence, on Thursday, 13December 2007. Upon Admission, the Company's enlarged issued share capital will comprise117,094,598 Ordinary Shares with voting rights. The Company does not hold anyshares in treasury. This figure of 117,094,598 Ordinary Shares may be used byshareholders in the Company following Admission as the denominator for thecalculations by which they will determine if they are required to notify theirinterest in, or a change in their interest in, the share capital of the Companyunder the Financial Services Authority's Disclosure and Transparency Rules. Enquiries: Andes Energia plc Michael Stevens, Chairman T: 020 7495 5326 Luis Alvarez Poli, Chief Executive Nigel Duxbury, Finance Director Arbuthnot Securities Neil Kirton T: 020 7012 2000Limited James Steel Antonio Bossi Bishopsgate Maxine Barnes T: 020 7562 3350Communications Nick RomeLimited This information is provided by RNS The company news service from the London Stock Exchange