SER.L Regulatory News (SER)

6 May 2014

Sefton Resources, Inc.

("Sefton" or the "Company")

Proposed Refinancing, Corporate Update, Update on the Loan Note

and Issue of Equity

Proposed Refinancing

Further to the announcement of 8 January 2014 (the "Announcement"), the board of directors of Sefton (the "Board") has been attempting to refinance Sefton and its subsidiaries (the "Group") following the decision by the Bank of the West (the "Bank") not to extend the Group's borrowing facilities (currently circa $4.7m outstanding).

During recent months, the Board has evaluated several proposals for refinancing and/or recapitalising the Group, addressing both the demand for repayment by the Bank and seeking additional working capital to support the Group's existing operations in California and Kansas.

The Board believe they have found the most appropriate financing option given the circumstances of the Group, and have entered into a Letter of Intent ("LOI") with a private US based energy company (the "Funder"), which provides interim working capital to the Group, an intention to repay and replace the borrowings from the Bank, and provides additional capital for growing the assets in California (the "Refinancing"). The Refinancing would include the issue of new equity in TEG USA Inc., the Group's operating subsidiary in California ("TEG USA"), that would result in the Funder acquiring an 80% shareholding in TEG USA (the "Investment"). Other elements of the Refinancing will include the provision of new loans to both Sefton and TEG USA, and the agreement to provide further capital to TEG USA to enable it to further develop the steaming operations at TEG USA's Tapia field.

The Investment will require the approval of Sefton's shareholders ("Shareholders") at a general meeting in accordance with the AIM Rules for Companies. Full details of the Investment, together with the broader Refinancing, information on the Funder, an update on the Group and a notice of the general meeting will be sent to Shareholders shortly.

Pending the agreement of final contractual terms and approval of the Investment by Shareholders, the Funder has provided interim working capital to TEG USA by way of a security agreement and a secured subordinated promissory note on the following terms:

· Amount - $200,000

· Maturity - July 18, 2014

· Interest rate - 3% per annum

· Security - all the assets of TEG USA (subordinated to the Bank)

· Fees - nil

· Conversion rights - none

Corporate Update

Further to the Announcement, Sefton has been operating under significant cash constraints for several months. Oil production has been reduced in both California and Kansas as some wells have been off line due to servicing requirements. Working capital restraints has resulted in Sefton not being able to pay its suppliers in a timely manner or contract for field service work, chemicals and power, as required. Declining production has resulted in declining cash flows, further limiting available resources for the Group. With additional working capital from the Funder, of which approximately $150,000 has been immediately drawn down, some of this decline is expected to be reversed in coming months.

Update on the Loan Note

In the announcement of 17 April 2014, Sefton advised that the holder of a Loan Note had converted $10,000 of the Loan Note into common shares of no par value in the Company ("Shares"). The conversion rate reflected market rates of the day, which was below the floor price of 0.195 pence per share detailed in the Announcement, as this floor price expired after 90 days from the initial drawdown of the Loan Note. This was not included in the announcement of 17 April 2014 as it has been the Company's intention to refinance the Loan Note within 90 days of the first draw down.

Issue of Equity

Further to the Announcement, Sefton has today issued 8,446,671 Shares pursuant to the conversion of US$20,000 of the Loan Note (as defined in the Announcement), at the equivalent to 0.1397 pence per Share (the "New Shares"). An application has been made for the New Shares to be admitted to trading to AIM on 12 May 2014. Following the issue of the New Shares, the Company will have a total of 741,741,919 Shares in issue. The outstanding balance of the Loan Note is now $135,000.

(All defined terms have the same meaning as the Announcement unless separately defined.)

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