Trading Emissions PLC Regulatory News (TRE)

Trading Emissions PLC

Proposed cancellation of admission to trading and notice of Extraordinary General Meeting

The Board of Trading Emissions PLC (the "Company") announces the Company's proposed cancellation from trading on AIM (the "Cancellation").

As previously announced by the Company on 27 March 2018, the Directors have concluded that it is in the best interests of the Company and its Shareholders to cancel the admission of the Ordinary Shares to trading on AIM.

The Company will today post to its shareholders a circular (the "Circular") in connection with the Cancellation containing a notice convening an extraordinary general meeting of the Company (the "Extraordinary General Meeting") to be held at 10.00 a.m. on 10 May 2018 at IOMA House, Hope Street, Douglas, Isle of Man, IM1 1AP.

Subject to the Resolution being passed at the Extraordinary General Meeting, the expected last day of dealings in Ordinary Shares on AIM will be 17 May 2018 and the Cancellation will become effective at 7.00 a.m. on 18 May 2018. Pursuant to Rule 41 of the AIM Rules, the Company, through Liberum Capital, has notified the London Stock Exchange of the proposed Cancellation.

The above summary should be read in conjunction with the full text of this announcement and the Circular. Extracts from the Circular, which sets out the background to and reasons for the Company seeking Cancellation, are set out below and a copy of the Circular will shortly be available on the Company's website https://www.tradingemissionsplc.com.

Defined terms used in this announcement have the meaning set out at the end of this announcement and as in the Circular.

Enquiries:

Trading Emissions plc +44 (0) 1624 681250

(Philip Scales)

Liberum Capital Ltd +44 (0) 20 3100 2222

(Steve Pearce/ Gillian Martin / Henry Freeman)

Market Abuse Regulation

This announcement is released by Trading Emissions plc and contains inside information for the purposes of the Market Abuse Regulation (EU) 596/2014.

The Company's LEI is: 213800UICZJWUHQCMM72

EXTRACTS FROM THE CIRCULAR

The following has been extracted without amendment from, and should be read in conjunction with, the Circular to Shareholders dated 17 April 2018, which will be available shortly from the Company's website: https://www.tradingemissionsplc.com/.

EXPECTED TIMETABLE OF EVENTS

Latest time and date for receipt of Form of Proxy 10:00 a.m. on 8 May 2018

Time and date of EGM 10:00 a.m. on 10 May 2018

Declaration of the Distribution 10 May 2018

Cancellation of trading to AIM effective 18 May 2018

Payment of the Distribution 23 May 2018

The above times and dates are subject to change, any revised times and/or dates will be notified to Shareholders through an RIS announcement

LETTER FROM THE CHAIRMAN

17 April 2018

Dear Shareholder

RECOMMENDED PROPOSALS FOR THE CANCELLATION OF ADMISSION TO TRADING ON AIM AND PAYMENT OF A DISTRIBUTION

1. BACKGROUND & RATIONALE FOR THE PROPOSALS

The Company was established as a public limited company incorporated in the Isle of Man in March 2005 and its Ordinary Shares were admitted to trading on AIM in April 2005. The Company's investing policy and principal objective was to invest in environmental and emissions assets together with certain classes of energy instruments and associated financial products, including emission reduction credits and related assets such as renewable energy facilities and companies whose value is enhanced by way of emission reduction markets and associated regulations.

In 2005 and 2006, the Company raised from investors aggregate net proceeds of £299.9 million.

In 2012 Shareholders amended the investing policy of the Company to carry out an orderly realisation of the portfolio of carbon and private equity assets, distribute the net proceeds to Shareholders and then undertake a voluntary winding-up of the Company. The assets comprised principally of a trading portfolio of ERPAs requiring the Company to acquire carbon credits at fixed prices; and a private equity portfolio of investments in unquoted start up and operating companies located around the world. New Directors were appointed to the Board in late 2011, who developed and implemented strategies to restructure, break up and sell the Company's portfolio of ERPAs and private equity investments.

The Company is now in the position where it has:

• Terminated or otherwise exited from substantially all ERPAs and the associated liabilities;

• Realised its entire portfolio of eligible carbon credits;

• Successfully defended the Company against a number of legal actions and claims brought by ERPA counterparties in China;

• Maximised operating distributions in the ordinary course of business from its private equity investments;

• Realised all of the Company's private equity investments or their underlying assets;

• Resolved various tax issues facing the Company and its private equity investments;

• Liquidated or placed into liquidation all but three of the Company's subsidiaries and associates after their underlying assets had been disposed of and liabilities settled;

• progressively reduced the Company's operating cost base; and

• distributed to Shareholders all net cash not required to meet liabilities and operating costs.

Since the Board was restructured in 2011, the Company has made distributions to Shareholders of an aggregate of £93.7 million, equivalent to 37.5p per Ordinary Share.

At 16 April 2018, the Company holds cash net of liabilities of £9.7 million, and is entitled to receive further proceeds from:

• TEP Solar, which at 16 April 2018 holds cash of:

(a) €1.0 million, which will become distributable to TEP to the extent that valid claims of up to €1.0 million in aggregate are not received by 30 June 2018 in connection with the realisation of a private equity investment; and

(b) €2.0 million placed in escrow, which will become distributable to TEP to the extent that valid claims are not received by 18 December 2018 in connection with the realisation of four private equity investments.

• the realisation of the EWG Slupsk wind farm project in Poland should the project proceed, which is uncertain given the recent policies announced by the Polish Government designed to promote power generation from sources other than wind.

The Board has conducted a review of the benefits and drawbacks to the Company and its Shareholders of retaining its admission to AIM and believes that Cancellation is in the best interests of the Company and its Shareholders as a whole. In reaching this conclusion, the Board has considered the following key factors:

• The Company has realised all of its investments. The continuing principal investment activity of the Company is to maximise the remaining proceeds receivable from TEP Solar and from the realisation of EWG Slupsk. The amounts receivable are small in comparison with the realisation proceeds generated to date and the distributions made to Shareholders, including the Distribution.

• The cost, management time and the legal and regulatory burden associated with maintaining the Company's admission to trading on AIM are, in the Directors' opinion, disproportionate to the benefits to the Company. The Directors are cognisant of the level of the Company's operating costs relative to the projected future activities of the Company. The Cancellation is expected to deliver direct cost savings for the Company as there will be no further obligation to pay London Stock Exchange, nominated adviser or broker fees. Additional operating cost savings are expected from:

(a) a change to the composition of the Board;

(b) a reduction in Directors' fees; and

(c) a reduction in the administration fee payable by the Company. Further details of these operating cost savings are provided in Section 2 below.

The operating cost savings are intended to maximise the remaining monies available for distribution to Shareholders, while maintaining appropriate continuing corporate governance and oversight. The estimated operating cost savings form part of the basis of calculation of the Distribution and are intended to maximise one or more further distributions to Shareholders.

Following the Cancellation, the Company will continue to maintain its website https://www.tradingemissionsplc.com/, through which it will make annual financial statements available to all Shareholders and provide information on significant events and developments relating to the Company. Following the Cancellation, the Board intends that access to the website will be password protected.

At the EGM, Shareholders will be requested to approve:

• the cancellation of the admission to trading on AIM by means of the Cancellation; and

• the Distribution.

If the Resolutions (which are conditional on each other) are not passed at the EGM, the admission to trading on AIM will be maintained and the Distribution will not be made. In these circumstances the Board intends to resolve to make a distribution to Shareholders of a smaller amount than the Distribution on the basis that additional working capital will be required to support the Company's ongoing operations and compliance with the AIM Rules.

Pursuant to the AIM Rules, an Investing Company that has disposed of all, or substantially all, of its assets has twelve months to implement its investing policy otherwise trading in its shares will be suspended by the London Stock Exchange. The London Stock Exchange will cancel the admission of a company's AIM securities where these have been suspended from trading for six months.

On 5 April the Company announced the completion of the sale of its remaining Italian solar operating subsidiary, Solar Energy Italia 1 Srl. On this date the Company had disposed of all, or substantially all, of its assets therefore if the Resolutions are not passed at the EGM, the Company has twelve months from 5 April 2018 to implement its investing policy otherwise its shares will be suspended.

The investing policy of the Company is to carry out an orderly realisation of the portfolio of carbon and private equity assets, distribute the net proceeds to Shareholders and then undertake a voluntary winding-up of the Company. No new private equity investments will be made.

2. OPERATING COST SAVINGS FOLLOWING CANCELLATION

Conditional on the Cancellation becoming effective, the Company will benefit from direct cost savings as there will be no further obligation to pay London Stock Exchange, nominated adviser or broker fees. Additional operating cost savings are expected from:

(a) a change to the composition of the Board. Conditional on the Cancellation becoming effective, Neil Duggan has expressed his intention to resign as a Director;

(b) a reduction in Directors' fees. Conditional on the Cancellation becoming effective, each of the remaining Directors, Martin Adams, Philip Scales and Mark Lerdal has agreed to reduce his annual remuneration by 50 per cent.; and

(c) a reduction in the administration fee payable by the Company. Conditional on the Cancellation becoming effective, the fee payable to the Administrator will reduce from £180,000 per annum to £100,000 per annum.

The additional operating cost savings are a direct result of the simplified oversight and administration of the affairs of the Company following the Cancellation. For example, it is the intention that the Company will no longer produce and publish interim financial statements.

3. CANCELLATION

In accordance with Rule 41 of the AIM Rules, the Company has notified the London Stock Exchange of the intention to cancel its admission to trading on AIM. Under the AIM Rules it is a requirement that the Cancellation is approved by not less than 75 per cent. of the votes cast by Shareholders (in person or by proxy) at the EGM.

The principal effects of the Cancellation will be that:

• the Ordinary Shares will no longer be admitted to trading on a public market and there will be no formal market mechanism enabling the Shareholders to trade Ordinary Shares;

• while the Ordinary Shares will remain freely transferrable, it is likely that the liquidity and marketability of the Ordinary Shares will, in the future, be significantly reduced and the secondary market value of the Ordinary Shares may be adversely affected as a consequence;

• there is no assurance that Shareholders will be able to realise their investment prior to the winding-up of the Company;

• there is no assurance of the future value of the Company's remaining assets or of the price at which Ordinary Shares may be bought or sold;

• in the absence of a formal market and quote, it will be more difficult for Shareholders to determine the market value of their investment in the Company at any given time;

• the regulatory and financial reporting regime applicable to companies whose shares are admitted to trading on AIM will no longer apply and Shareholders will no longer be afforded the protections provided by the AIM Rules and the Market Abuse Regulation, such as the requirement to be notified of certain events, or to vote on certain substantial transactions.

In particular, the Company will not be bound to make any public announcements of material events, or to announce financial results;

• the levels of transparency and corporate governance within the Company will not be equivalent to those for a company admitted to trading on AIM;

• the Company will cease to have a nominated adviser and broker;

• whilst the Company's CREST facility will remain in place immediately following the Cancellation, the Company's CREST facility may, if the Board so determines, be cancelled in the future in order to save the associated costs. Although under such circumstances the Ordinary Shares will remain transferable, they will cease to be transferable through CREST. In this instance, Shareholders who hold Ordinary Shares in CREST will receive share certificates; and

• the Cancellation may have taxation consequences for Shareholders. Shareholders who are in any doubt about their tax position should consult their own professional independent tax adviser.

The above considerations are not exhaustive and Shareholders should seek their own independent advice when assessing the likely impact of the Cancellation.

If Shareholders wish to buy or sell Ordinary Shares on AIM they must do so prior to the Cancellation. Conditional on the Cancellation becoming effective, it is currently expected that the last day of dealings in the Ordinary Shares on AIM will be 17 May 2018 and that the effective date of the Cancellation will be 18 May 2018.

Shareholders should be aware that the Takeover Code will continue to apply to the Company for a period of 10 years from the Cancellation. Although the Takeover Code will continue to apply to the Company, certain Shareholders hold a significant percentage of the current issued share capital and may seek to exert increased influence over the Company.

Following the Cancellation becoming effective, the Company, being a closed-ended investment company governed by the Isle of Man Companies Act 2006 will maintain appropriate corporate governance and oversight. The Company will also remain subject to the provisions of its memorandum and articles of association pursuant to which Shareholder approval is required for certain matters.

Following the Cancellation, the Company will continue to maintain its website through which it will make annual financial statements available to all Shareholders and provide information on significant events and developments relating to the Company. However, there will be no obligation on the Company to include all of the information required by AIM Rule 26 or to update the website as required by the AIM Rules. Following the Cancellation, the Board intends that access to the website will be password protected.

If the Resolutions (which are conditional on one other) are not passed at the EGM, the Company's admission to trading on AIM will be maintained. However, the estimated operating costs will not reduce as projected and the Distribution will not be made. In these circumstances the Board intends to resolve to make a distribution to Shareholders of a smaller amount than the Distribution on the basis that additional working capital will be required to support the Company's ongoing operations and compliance with the AIM Rules.

4. DISTRIBUTION

Conditional, inter alia, upon the Resolutions being passed at the EGM, the Company will (subject to the Directors being satisfied, on reasonable grounds, that the Company will satisfy the Solvency Test immediately following the Distribution) declare and effect the Distribution.

The Distribution accounts for approximately 73% of the cash held by the Company at 16 April 2018, after allowing for liabilities and estimated operating costs up to the projected winding up of the Company.

The Distribution will be made as soon as practicable following the EGM and is expected to be 3.5 p per Ordinary Share, to be paid on 23 May 2018 to Shareholders recorded on the register on 18 May 2018. The Ordinary Shares will be marked "ex" on 17 May 2018.

5. VOLUNTARY WINDING-UP

After the Company has received the remaining proceeds from TEP Solar and from the realisation of EWG Slupsk (See Section 1. above), the Board intends to distribute substantially all remaining cash to Shareholders, subject to retaining sufficient monies to meet outstanding liabilities and the costs of liquidation of the Company and its remaining subsidiaries. A further extraordinary general meeting of Shareholders will be convened to approve the voluntary winding-up of the Company. It is the intention of the Board that the final material distribution to Shareholders will be made prior to the appointment of a liquidator of the Company.

6. EXTRAORDINARY GENERAL MEETING

The EGM will be held at 10 a.m. on 10 May 2018 at IOMA House, Hope Street, Douglas, Isle of Man IM1 1AP, British Isles. The Notice of EGM is provided in Part 2 of this document.

The first resolution to be proposed at the EGM is the Cancellation Resolution, which will be a special resolution (requiring at least 75 per cent. of the voting rights cast at the EGM to be in favour of the Cancellation Resolution) that the admission of the Company to trading on AIM be cancelled. The second resolution to be proposed at the EGM is the Distribution Resolution, which will be an ordinary resolution (requiring at least 50 per cent. of the voting rights cast at the EGM to be in favour of the Distribution Resolution) that the Distribution be approved and made.

Each of the Resolutions to be proposed at the EGM is conditional upon the passing of the other Resolution to be proposed at the EGM.

7. ACTION TO BE TAKEN

A Form of Proxy for use at the EGM is provided with this document. Whether or not you propose to attend the EGM in person, you are requested to complete and sign the Form of Proxy as soon as possible and in any event no later than 10 a.m. on 8 May 2018 and send the completed and signed form to the Company's registrars at IOMA House, Hope Street, Douglas, Isle of Man IM1 1AP.

Completion and return of a Form of Proxy will not prevent you from voting in person at the EGM should you so wish.

8. RECOMMENDATION

The Directors consider the Resolutions to be in the best interests of the Company and Shareholders as a whole and therefore unanimously recommend that Shareholders vote in favour of the Resolutions.

Martin M. Adams

Chairman

DEFINITIONS

2006 Act the Isle of Man Companies Act 2006 (as amended from time to time)

AIM the AIM market of London Stock Exchange plc

AIM Rules the AIM rules for companies whose securities are admitted to trading on AIM as published by the London Stock Exchange from time to time

Articles the articles of association of the Company

Board the board of Directors at the date of this document

Cancellation the proposed cancellation of admission of the Ordinary Shares to trading on AIM, currently intended to take place on 18 May 2018

Company or TEP Trading Emissions plc, registered in the Isle of Man with company number 007837V

Director a director of the Company at the date of this document

Distribution the proposed distribution of 3.5p per Ordinary Share as detailed in this document

EGM the extraordinary general meeting of Company convened for 10 May 2018 notice of which is set out on page 10 of this document

ERPA Emission Reduction Purchase Agreements

EWG Slupsk EWG Slupsk Sp. z o.o a company registered in Poland that obtained approvals for a Polish wind farm project previously owned by the Company

Form of Proxy the form of proxy for use in connection with the EGM

Group the Company and its subsidiaries

London Stock Exchange London Stock Exchange plc

Ordinary Shares ordinary shares of 1 penny each in the capital of the Company

Resolutions the resolutions to be proposed at the EGM or any one or more of them as the context so requires

RIS Regulatory Information Service

Shareholders holders of Ordinary Shares

Solvency Test the statutory solvency test set out in section 49 of the 2006 Act namely that (i) a company is able to pay its debts as they become due in the normal course of business and (ii) the value of a company's assets exceed the value of its liabilities

Takeover Code The City Code on Takeovers and Mergers which applies to companies listed on the London Stock Exchange

TEP Solar TEP (Solar Holdings) Limited, a wholly owned subsidiary of the Company incorporated in the Republic of Ireland