Tern Regulatory News (TERN)

31 July 2013

Silvermere Energy Plc

("Silvermere" or the "Company")

Publication of Circular & Notice of General Meeting

The Company announces that it has published a circular to shareholders (the "Circular") convening a general meeting to be held at 11:00 a.m. on 16 August 2013 at the offices of Peterhouse Corporate Finance Limited, 31 Lombard Street EC3V, 9BQ to consider the resolutions set out at the end of the Circular.

The Circular is available on the Company's website at www.silvermere-energy.com. The letter from the Chairman of Silvermere contained within the Circular is copied below. References within it have the same meanings as defined in the Circular.

Enquiries:

Silvermere Energy plc

Andy Morrison, Chief Executive

Tel: 07980 878 561

Sanlam Securities UK Limited (Nominated Adviser and Joint Broker)

Simon Clements/Scott Mathieson/Catherine Miles

Tel: 020 7628 2200

Peterhouse Corporate Finance Limited (Joint Broker)

Heena Karani/Duncan Vasey

Tel: 020 7469 0933

Bishopsgate Communications

Nick Rome/Anna Michniewicz/Ivana Petkova

Tel: 020 7562 3350

Letter from the Chairman of Silvermere Energy Plc

(Incorporated in England and Wales under the Companies Act 1985with Registered No. 5131386)

31 July 2013

To Shareholders and, for information only, holders of Existing Warrants and Existing Options

Proposals for:

Company Voluntary Arrangement ("CVA")

Disposal of Assets

Capital Reorganisation

Approval of Investing Policy

Change of Name

Proposed Placing

Proposed subscription of Convertible Loan Notes

and

Notice of General Meeting

Introduction

On 9 May 2013, the Company announced a suspension of trading of its securities on AIM pending clarification of its financial position. Silvermere announced on 31 July 2013 that it proposes to enter into a CVA, dispose of the Mustang Asset, undertake the Capital Reorganisation, adopt a new Investing Policy pursuant to Rule 15 of the AIM Rules, change its name to Tern Plc and implement the subscription of the Convertible Loan Notes and the Placing Shares.

Consequently, the Company is issuing this Circular to Shareholders setting out the background to and the reasons for the Proposals and, where appropriate, seeking Shareholders' approval. A notice convening a General Meeting for 11:00 a.m. on 16 August 2013 at the offices of Peterhouse Corporate Finance Limited to consider the Resolution is set out at the end of this Circular.

Peterhouse Corporate Finance Limited has, as Broker to the Company, conditionally raised £300,000 before expenses by way of the Placing at £0.0023 per share and the Convertible Loan Notes which are convertible into 198,412,698 New Ordinary Shares at the Conversion Price. The issue of the Convertible Loan Notes and the Placing are conditional on approval of the CVA, passing of the Resolution, Admission and the exchange of the Disposal Agreement.

The proceeds of the Convertible Loan Notes and the Placing will be used to provide the Company with working capital to allow it to continue to trade and to pursue its Investing Policy, further details of which are set out below.

It is proposed that, should the Proposals be approved at the General Meeting, Frank Moxon, Andy Morrison and Stewart Dalby will resign as directors with immediate effect following the conclusion of the General Meeting and that the Proposed Directors will then immediately join the Board.

Information on Silvermere

Silvermere has been operating in its current form for approximately two years since having acquired the Mustang Asset and been readmitted to AIM in August 2011. Prior to that, it was an investment company with a remit to invest in oil and gas assets.

For the year ended 31 December 2012, the audited accounts show a loss of £5,035,018 before tax. The Company generated no revenues during the period. As at 31 December 2012, the audited net liabilities of Silvermere amounted to £909,922. For the six month period ended 30 June 2013 the unaudited interim accounts showed a loss of £524,478 on revenues of £nil.

On 9 May 2013, the Company's shares were suspended from trading on AIM pending clarification of its financial position.

Background to and reasons for the Disposal and the CVA

In mid-2011, the Directors were introduced to Silvermere which was negotiating to acquire the Mustang Asset.

The Mustang Asset comprises a 33.33 per cent working interest (20.0 per cent net entitlement interest) in a part of Block 818-L in the Gulf of Mexico offshore Kleburg County, Texas and, within that licence area, a 16.67 per cent working interest (8.0 per cent net entitlement interest) in the I-1 Well. The well is located in shallow waters under approximately 72 feet of water.

Having acquired the asset, secured development capital and successfully achieved a restoration of trading in the Company's shares on AIM in August 2011, the Board's principal task was to achieve completion of the I-1 Well and commence production. This was intended to be the first step in a strategy to acquire a portfolio of US oil and gas licence interests onshore and in shallow offshore waters, characterised by relatively low risk and low cost with the potential for near term production.

However, the Board considers it is now in the best interests of Silvermere's creditors and Shareholders to enter into the Disposal, the CVA and to seek a future for the Company that depends upon an injection of new management, new funds and a change of business activity.

The reasons for this can be summarised as follows:

1. Difficulties in achieving sustained production from the I-1 Well.

The I-1 Well, which is part of the Mustang Asset, was originally scheduled to begin production in late 2011. This did not occur on time due to a delay in construction of the rig platform to comply with new US Federal design requirements in light of the BP 2010 oil spill in the Gulf of Mexico.

In early 2012, deployment of the production platform for the I-1 Well was delayed further when the only available lift boat in the region was severely damaged prior to its release to Silvermere.

When the I-1 Well did commence production the off-take pipeline was shut down for repairs at short notice by its operator. There was no alternative pipeline in place for Silvermere or Dominion. Dominion is the operator of the Mustang Asset.

To date, the I-1 Well is still not producing due to obstructions in the well bore, the precise nature of which cannot be ascertained without further investigation and cost.

Inevitably, the cumulative operational difficulties experienced affected the Company's cash flow and it has therefore been unable to meet its share of financial commitments to Dominion. The Company's default of its obligations puts its ownership of the Mustang Asset at risk under the terms of the Joint Operating Agreement.

Prior to recommending the current proposals, the Directors held detailed discussions with a number of potential investors to secure finance to fund the Company's share of the costs of technical investigations at the I-1 Well and to bring it into production. In each case the potential investor withdrew. Separately the Directors offered the Mustang Asset for sale but after discussions with several potential buyers, no offer was forthcoming, that, in the opinion of the Directors, was deliverable.

2. Difficulties with converting transaction pipeline into deal flow

At the time of its acquisition by Silvermere and in its current state the Mustang Asset produces no revenues. This has materially adversely impacted on the implementation of the Company's strategy to identify and acquire further assets to build up a diversified portfolio of oil and gas properties.

As a direct result of the chain of events described above, the Board has determined that the orderly disposal of the Mustang Asset on the terms of the proposed Disposal Agreement in exchange for a release from all past and future obligations is in the best interests of the Company. The Directors wish to avoid a liquidation of the Company and the consequent likely loss in value for all creditors.

The Directors estimate that third party creditors shortfall is £1,159,376, the majority of which is made up of outstanding 2011 Loan Notes owned by Mineral & Financial Investments Limited and Wednesday Ltd in respect of which the aggregate amount owed by the Company, and which became due for repayment on 1 July 2013, is £750,000. The Directors have decided to seek to resolve these and Silvermere's other outstanding financial obligations by way of the CVA and bring in new management, new funds and a change of business activity.

If the CVA is not approved, the Directors believe that the only alternative is likely to be for the Company to be placed into liquidation. Having taken appropriate professional advice the Directors believe it highly unlikely, in such circumstances, that shareholders or creditors would be able to recover any value for their shares in or amounts owed to them by Silvermere.

Furthermore, if both the proposed Disposal and the CVA are not approved the Company will be open to further financial claims. This is likely to lead to liquidation and total loss for Shareholders and creditors.

Company Voluntary Arrangement

The Company currently has outstanding creditors of approximately £1,192,635. It is proposed that the Company will issue 69,090,144 New Ordinary Shares each to preferential and unsecured creditors of Silvermere, estimated at £1,192,635. Based on this estimate, unsecured creditors will receive approximately 58 New Ordinary Shares will be issued per £1 of debt, however for the avoidance of doubt this is not guaranteed. The CVA is not conditional on the resumption of trading of the Company's securities on AIM.

Mineral & Financial Investments Limited has signed an irrevocable agreement to accept New Ordinary Shares in the Company against its debt of £660,000 due from the Company. Mineral & Financial Investments Limited's debt represents 55.3 per cent. of the outstanding creditors. In addition, Mineral & Financial will appoint a director to the Board, Laurence Read. The Directors have undertaken to vote in favour of the CVA proposal in respect of amounts due to them from the Company, estimated at £178,992.

A CVA requires the approval of 75 per cent. or more, in value of the creditors voting on the resolution in person or by proxy. If approved by such a majority for such resolution to be valid, not more than half in value of creditors who are not "connected" with the Company shall have voted against the resolution. Once approved, it binds all creditors who were entitled to vote whether or not they were present or represented at that meeting and so voted and whether or not they actually received notice of the meeting.

A CVA also requires that it be approved by in excess of 50 per cent. in value of the members of the Company present in person or by proxy and voting on the resolution. The value of the members is determined by reference to the number of votes conferred on each member by the Company's articles of association.

It is anticipated that the CVA will be approved at meetings to be held at 10:30 a.m. and 11:00 a.m. on 16 August 2013.

The CVA would not result in any distribution being made to the Shareholders of the Company.

The Directors have requested that Antony Batty of Antony Batty & Company act as Nominee in respect of the proposal of the Directors for a Company Voluntary Arrangement. Mr Batty has provided his consent to act and his Nominee's Report has been be filed at Court as required.

A copy of the Directors' proposal incorporating the Nominee's Report will be available for download from the following website www.antonybatty.com.

Should any Shareholder wish to receive a paper copy of the proposal, please contact Antony Batty & Company on 020 7831 1234, or email antonyb@antonybatty.com, or in writing to Antony Batty, 3 Field Court London WC1R 5EF.

The Disposal

The Company's sole commercial asset is its wholly owned subsidiary which is part owner of the Mustang Asset. As at 31 May 2013, the Subsidiary owes Dominion US$285,411.38, which is secured against the Mustang Asset, and will become liable for further contributions to the costs of the Mustang Island 818-L field. The Company has not been able to raise funds to meet the Group's obligations to Dominion and accordingly the Company intends to enter into an agreement to transfer the Subsidiary to Dominion in full and final settlement of all monies owed between the parties and of any future liabilities, unless a better offer is received from another party before the date of the General Meeting and Creditors' Meeting. The agreement will be conditional only upon Shareholder approval at the General Meeting and completion of the CVA. Failure to complete the Disposal will leave the Company still facing the loss of the asset while potentially retaining uncapped future liabilities.

The Disposal is considered a fundamental change in the business of Silvermere and therefore, pursuant to the AIM Rules, requires the consent of Shareholders. The Resolution seeks such an authority by way of special resolution.

Any cash remaining in the Company will be used towards the Company's working capital requirement. The Company will have no other ready realisable/material assets following the Disposal.

The Subscription and the Placing

Peterhouse has, as broker to the Company, conditionally raised £300,000 before expenses through the Subscription of the Convertible Loan Notes and the Placing. The Placing and the Subscription is conditional on approval of the CVA at a meeting of the creditors, approval of the Resolution, Admission and the exchange of the Disposal Agreement. The net proceeds of the Placing and the Subscription are estimated at £250,000.

Peterhouse will be paid £7,000 in New Ordinary Shares at the Placing Price (3,043,478 New Ordinary Shares) and issued with a warrant which is exercisable over 1.5 per cent of the Company's Enlarged Share Capital from time to time at the Placing Price for a period of 3 years, as part payment for the introduction of the incoming Investors. The payment is to be issued conditional on the Proposals being approved by Shareholders at the General Meeting.

The proceeds of the Placing and the Subscription will be used to provide the Company with working capital to allow it to pursue its Investing Policy, further details of which are set out below.

Following completion of the CVA, Placing and the Capital Reorganisation, the Investors will, in aggregate, hold approximately 28.96 per cent. of the Enlarged Share Capital.

Any conversion of the Convertible Loan Notes is conditional on the number of New Ordinary Shares to be issued to Investors on conversion not resulting in such holder (when aggregated with any interests the Investor may hold in existing issued New Ordinary Shares and any persons acting in concert with it), being required to make a mandatory bid for all of the New Ordinary Shares in the Company under the rules set out in the City Code on Takeovers and Mergers and most particularly under Rule 9 of the City Code on Takeovers and Mergers or any equivalent provision which amends or replaces Rule 9 of the City Code on Takeovers and Mergers.

Unless previously converted, the final maturity date of the Convertible Loan Notes is 1 January 2015.

If the CVA is approved by Shareholders and Creditors and the proposed Disposal is approved by Shareholders, then the Company's indebtedness and liabilities will be eliminated. Then if approval for the issue of Convertible Loan Notes is granted and the Placing completes, the Company will have the necessary funds to continue to trade as an Investing Company on AIM. On Completion, the Company's assets will comprise cash of approximately £250,000.

Shareholders should be aware that the Placing and the Subscription is conditional upon the passing of the Resolution, the approval of the CVA, Admission and the exchange of the Disposal Agreement. If the CVA is not approved or the Resolution is not passed then the Placing and Subscription will not proceed, the Company would then have insufficient working capital to continue as a going concern and, in the absence of any other source of funding, the Directors may have no alternative but to place the Company into creditors' voluntary liquidation.

Change of Name

Subject to Shareholders' approval at the General Meeting, Admission and exchange of the Disposal Agreement, it is proposed that the name of the Company be changed to Tern Plc.

Proposed Directors

Subject to the Resolution being passed, the completion of the CVA, Admission and the exchange of the Disposal Agreement, the Directors will resign from the Board and without any compensation then due.

It is proposed that immediately following the General Meeting, Mr Angus Forrest will join the Board as Executive Director and Bruce Leith as Non-Executive Director, who will join the Board following completion and subject to the Resolution being passed.

Angus Forrest - Proposed Executive Chairman

Angus Forrest has been a venture capitalist for more than 20 years, specialising in business-to-business sales driven companies. He is currently the non-executive Chairman of Shidu Capital plc, an AIM traded investment business focused on the Pacific Rim.

Previously he was Chairman of Intellego Holdings plc, which changed its name to Digital Learning Marketplace plc, an e-learning business which was sold in late 2012.

Angus was the chief executive of Billam Plc, an AIM quoted investment company, which he co-founded in 2000. Billam Plc invested in Cybit, which was an investment in a pre-revenue business. Billam was responsible for changing Cybit's business model, introducing technology, arranging the IPO, recruiting a new Chairman and CEO and assisted with the first acquisition, the Fleetstar division of Trafficmaster. Cybit is now the largest telematic business in Europe.

Angus Forrest is a current or past director of the following companies:

Present Past

Alpha Returns Group Limited Intellego Knowledge Solutions Limited

Carrara (No1 Nominees) Limited

Carrara Nominees Limited

DLM Products LTD

DLM Professional Services LTD

Dunnet Nominees LTD

Dunnet (No1 Nominees) Limited

Shidu Capital Plc

Talisman Ventures Limited

Tern Limited

Concurrently with his appointment, Mr. Forrest will be interested in £100,000 of the Unsecured Convertible Loan Notes of 1 January 2015.

There are no other matters under paragraph (g) of Schedule 2 of the AIM rules to be disclosed.

Bruce Leith - Proposed Non-Executive Director

Bruce began his career with IBM and has international sales experience in the software industry. Bruce was a senior executive at DataWorks Corporation and at London Bridge Software International. Bruce has also been involved as an active angel investor in several high growth software businesses.

Bruce Leith is a current or past director of the following companies:

Present Past

Leith Partners Limited Certivox Limited

Intellego Zenosis Limited Intellego Knowledge Solutions Limited

Pixelearning Limited Intellego PDP Limited

Shidu Capital Plc Numecent Holdings LTD

Tern Limited

Concurrently with his appointment, Mr. Leith will be interested in 43,478,261 Ordinary Shares in the Company representing 28.96 per cent of the Enlarged Share Capital.

There are no other matters under paragraph (g) of Schedule 2 of the AIM rules to be disclosed.

Laurence Read - Proposed Non-Executive Director

Laurence has over 13 years working with growth companies on investor relations and strategic development. Laurence is currently a non-executive of AIM quoted companies; Mineral and Financial Investments Ltd and Bezant Resources PLC in addition to being CEO of Mowbrai Ltd, a private company. Having experience of UK and overseas fundraisings Mr Read will work with the board on corporate development and financial marketing.

Laurence Read is a current director of the following companies and has no past directorships:

Present

Mineral & Financial Investments Limited

Mowbrai Limited

Bezant Resources Plc

Mr. Read is a director of Mineral & Financial and following the completion of the CVA, Mineral & Financial is expected to be interested in 35,166,883 New Ordinary Shares in the Company representing 23.42 per cent of the Enlarged Share Capital.

There are no other matters under paragraph (g) of Schedule 2 of the AIM rules to be disclosed.

Capital Reorganisation

The existing ordinary share capital comprises 34,545,072 ordinary shares of £0.001 in issue. The reorganisation of the Company's share capital will result in the sub-division of each Existing Ordinary Share into one New Ordinary Share of £0.00001 each and one New Deferred Share of £0.00099 each.

The New Ordinary Shares will continue to carry the same rights as attach to the Existing Ordinary Shares (save for the reduction in nominal value).

Assuming, inter alia, that the CVA and the other proposals are approved by Shareholders, the Company intends to seek for the suspension of trading in its shares to be lifted.

The New Deferred Shares will not entitle the holder thereof to receive notice of or attend and vote at any general meeting of the Company or to receive a dividend or other distribution or to participate in any return on capital on a winding up other than the nominal amount paid on such shares following a substantial distribution to holders of ordinary shares in the Company. Subject to the passing of the Resolution, the Company will have the right to purchase all the issued New Deferred Shares from all Shareholders for an aggregate consideration of one penny. As such, the New Deferred Shares effectively have no value. Share certificates will not be issued in respect of the New Deferred Shares.

It is proposed that the Articles of Association of the Company be amended to reflect the rights attaching to the New Deferred Shares. A copy of the amended Articles of Association will be available for inspection at the General Meeting and will be made available on the Company's website at www.silvermere-energy.com. The practical effect of this change, if implemented, will be that each Shareholder will receive the same number of New Ordinary Shares as they hold Existing Ordinary Shares, without diminution in rights pertaining to each share held.

Share capital

The Company is seeking authorisation to allot additional equity securities on a non pre-emptive basis up to a nominal amount of £6,000 to enable the Proposals to be implemented, including approximately £3,100 to allow the Convertible Loan Note to become unconditional, with the balance of approximately £2,900 to be used for the issue of and for any allotment of equity securities for cash.

Investing Policy

The Resolution to be proposed at the General Meeting proposes the adoption of the new Investing Policy.

It is proposed by the Proposed Directors that the Company's Investing Policy will be to invest principally, but not exclusively, in the information technology sector within Europe. The Proposed Directors believe that the Company can invest in and acquire information technology businesses, improve them by a combination of new management and investment and realise the value created which will be returned to shareholders. The Company may be either an active investor and acquire control of a single company or it may acquire non-controlling shareholdings. Once a target has been identified, additional funds may need to be raised by the Company to complete a transaction.

The Proposed Directors see IT as having considerable growth potential for the foreseeable future and many of the prospects they have identified are in this sector. They believe there are opportunities to invest in and acquire established IT businesses which have good technology, marquee customers and could better exploit their assets with the injection of experienced management and new funds with the intention of creating value for Shareholders.

Although the Company intends the main focus of the investment policy to be on the exploitation of IT businesses; this will not preclude the Company from considering investment in suitable projects in other sectors where the Proposed Directors believe that there are high-growth opportunities.

It is anticipated that the main driver of success for the Company will be expertise that can be provided by the Proposed Directors to the management involved in the potential investee companies and the value creation that the team of people is capable of realising. The Company intends to be an active investor. Accordingly, it may seek representation on the board of investee companies.

In the first instance, the new capital available to the Company will be used to locate, evaluate and select investment opportunities that offer satisfactory potential capital returns for Shareholders. Once the Proposed Directors have identified the most attractive investments, the Company may require further funds in order to take up these opportunities. It is the intention of the Proposed Directors to undertake further fundraising, if such an opportunity should arise. The Company's investments may take the form of equity, debt or convertible instruments. Investments may be made in all types of assets falling within the remit of the Investing Policy and there will be no investment restrictions.

The Proposed Directors may consider it appropriate to take an equity interest in any proposed investment which may range from a minority position to 100 per cent. ownership. Proposed investments may be made in either quoted or unquoted companies and structured as a direct acquisition, joint venture or as a direct interest in a project.

The Company will seek investment opportunities which can be developed through the investment of capital or where part of or all of the consideration could be satisfied by the issue of new Ordinary Shares or other securities in the Company. The opportunities would generally have some or all of the following characteristics, namely:

• a majority of their revenue derived from IT or the use of IT, and strongly positioned to benefit from market growth;

• a trading history which reflects past profitability or potential for significant capital growth going forward; and

• where all or part of the consideration could be satisfied by the issue of new Ordinary Shares or other securities in the Company. 
 

The Company will identify and assess potential investment targets and where it believes further investigation is required, intends to appoint appropriately qualified advisers to assist.

The Company proposes to carry out a comprehensive and thorough project review process in which all material aspects of any potential investment will be subject to rigorous due diligence, as appropriate. It is likely that the Company's financial resources will be invested in a small number of projects or investments or potentially in just one investment which may be deemed to be a reverse takeover of the Company under the AIM Rules.

Where this is the case, it is intended to mitigate risk by undertaking an appropriate due diligence process. Any transaction constituting a reverse takeover under the AIM Rules would require its shareholders' approval. The possibility of building a broader portfolio of investment assets has not, however, been excluded.

The proceeds of the Placing, the Subscription and the process of Admission will enable the Company to take initial steps to implement this new strategy and it is likely that the Company will undertake a further fundraising in the future to provide additional capital for the Company.

The Proposed Directors believe that their broad collective experience together with their extensive network of contacts will assist them in the identification, evaluation and funding of suitable investment opportunities. The Proposed Directors will also consider appointing additional directors with relevant experience if the need arises.

The objective of the Proposed Directors is to generate capital appreciation and any income generated by the Company will be applied to cover costs or will be added to the funds available to further implement the Investment Policy. In view of this, it is unlikely that the Proposed Directors will recommend a dividend in the early years. However, they may recommend or declare dividends at some future date depending on the financial position of the Company. Given the nature of the Company's Investing Policy, the Company does not intend to make regular periodic disclosures or calculations of net asset value.

The Proposed Directors confirm that, as required by the AIM Rules, they will at each annual general meeting of the Company seek shareholder approval of its Investing Policy.

Certificates

No new share certificates will be issued as a result of the Company's name change or the change in nominal value of the New Ordinary Shares or the New Deferred Shares.

General Meeting

If the Resolution is not passed, the General Meeting will be adjourned and, since the Company would have insufficient working capital to continue as a going concern and given that it would still face the loss of the Mustang Asset while potentially retaining uncapped future liabilities, the Directors would have no alternative but to place the Company into creditors' voluntary liquidation. Having taken appropriate professional advice the Directors believe it highly unlikely, in such circumstances, that shareholders or creditors would be able to recover any value for their shares in or amounts owed to them by Silvermere.

The Notice convening the General Meeting at which the Resolution will be proposed is set out at the back of this Circular. A summary of the Resolution is set out below.

The Resolution

The Resolution, which will be proposed as special resolution, seeks:

a. approval for the CVA;

b. approval for the Disposal;

c. approval for the subdivision of each Existing Ordinary Share into 1 New Ordinary Share and 1 New Deferred Share;

d. to grant the directors of the Company authority to allot New Ordinary Shares in the capital of the Company up to the nominal amount of £6,000;

e. seeks to dis-apply the statutory pre-emption rights over New Ordinary Shares authorised for allotment pursuant to clause d;

f. approval for the proposed Investing Policy;

g. approval for the amendment of the Company's Articles of Association to create and reflect the rights attaching to the New Deferred Shares; and

h. approval to change the name of the Company to Tern Plc.

Action to be taken

Shareholders will find a Form of Proxy enclosed for use at the General Meeting. Whether or not you intend to be present at the General Meeting, you are requested to complete and return the Form of Proxy in accordance with the instructions printed thereon as soon as possible. To be valid, completed Forms of Proxy must be received by the Company's registrars, Share Registrars at Suite E, First Floor, 9 Lion & Lamb Yard, Farnham, Surrey, GU9 7LL  not later than 11:00 a.m. on 14 August 2013, being 48 hours before the time appointed for holding the General Meeting. Completion of the Form of Proxy will not preclude you from attending and voting at the General Meeting in person if you so wish.

Recommendation

The Directors consider the Proposals to be in the best interests of the Company, its creditors and the Shareholders as a whole as the only alternative, in the absence of any other source of funding, will be liquidation which the Directors believe would deliver very little or no value to its creditors or Shareholders. The Directors therefore recommend that you vote in favour of the Resolution as they intend to do themselves in respect of their shareholdings and any shares held by nominees will be requested to act accordingly, their shareholdings amount in aggregate to 1,934,629 Existing Ordinary Shares representing approximately 5.60 per cent of the existing share capital.

Yours faithfully,

Frank Moxon

Non-Executive Chairman

for and on behalf of the Board

End

The Directors of the Company are responsible for the contents of this announcement.