Rurelec Regulatory News (RUR)

25 January 2023

Rurelec PLC

("Rurelec" or the "Company")

Trading Update

The Company's financial condition and prospects remains in line with the position reported on 30 September 2022. There has been no further receipt of cash from Argentina; cash at the bank on 31 December was £ 400k and based on the Company's current cash burn it is anticipated that if no further action is taken this will provide sufficient working capital until around the middle of the second quarter of 2023. The Macro economic situation in Argentina is not favourable to Energia del Sur, S.A. ("EdS"), the company which owns and operates the 136 MW Southern Patagonia CCGT power plant in Argentina in which Rurelec has a majority interest. As a consequence it is unlikely that EdS will be able to pay dividends to Rurelec in the short term. 

In addition, the Directors note that the Company does not have shareholder authority to issue any new shares. The Directors have consulted with the Company's majority shareholder seeking support for a shareholder resolution to allow the issuance of new shares. At the current time that shareholder is not minded to support such a resolution and has not indicated that this is likely to change. Accordingly Shareholders should be aware that Rurelec does not have the flexibility to access the equity capital markets for funding, and therefore the Company may not be able to raise working capital on reasonable terms, or at all.

There has, however, been continued interest in recent months for the Company's major assets which Rurelec is seeking to dispose. In particular, the directors of Rurelec are in discussions to agree heads of terms with an overseas counterparty to dispose of the Company's ultimate interest in EdS in Argentina, which if consummated in the anticipated timeframe could resolve the uncertainty surrounding the Company's working capital position. It should be noted that, depending on any future negotiated terms, any disposal of the interest in Argentina is likely to be considered a fundamental disposal by the Company pursuant to AIM Rule 15 of the AIM Rules for Companies. That being the case, any such disposal would be conditional on shareholder approval and be accompanied by a publication of a shareholder circular. In addition, it is possible that following such disposal, the Company would be regarded as an AIM Rule 15 cash shell with additional regulatory consequences. However, given the preliminary nature of such discussions there can be no certainty that this initiative will conclude in time, or at all. Further updates will be provided in due course as appropriate.

In summary, Rurelec's liquidity position will become acute during the second quarter of 2023. 

This announcement contains inside information for the purposes of Article 7 of the UK version of Regulation (EU) No 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR"). Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

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