Trinity Regulatory News (TRIN)

Bayfield Energy Holdings plc

("Bayfield" or the "Company", AIM: BEH)

Proposed merger with Trinity Exploration & Production Limited

Bayfield Energy Holdings plc ("Bayfield" or the "Company") (Ticker Symbol: BEH), an upstream oil and gas exploration and production company with interests in Trinidad & Tobago and South Africa, today announces proposals for a merger with Trinity Exploration & Production Limited ("Trinity").

Summary

·; The Boards of Bayfield and Trinity are pleased to announce that they have reached agreement on the terms of a conditional merger of Bayfield and Trinity (the "Merger").

·; The enlarged group will be named Trinity Exploration & Production plc ("New Trinity" or the "Enlarged Group") and be led by Bruce Dingwall CBE as Executive Chairman and Joel "Monty" Pemberton as Chief Executive Officer (currently Executive Chairman and Chief Executive Officer of Trinity respectively).

·; Trinity is a leading private independent oil and gas company with onshore and offshore assets in Trinidad, headquartered in San Fernando, Trinidad.

·; The Merger will create the largest Trinidad-focused independent E&P company, with 11 operated fields, gross production of approximately 4,650 bbl/d and net production of approximately 3,800 bbl/d based on current production rates.

·; New Trinity will have a diversified portfolio of onshore, West and East coast production, significant near-term production growth opportunities from low risk developments and multiple exploration prospects with the potential to deliver meaningful reserves/resource growth through an active drilling programme.

·; In order to accelerate delivery of the significant upside that exists in the combined portfolios, the Enlarged Group intends to raise additional debt and/or equity capital in conjunction with the Merger.

·; Under the terms of the Merger, which will be effected by the acquisition of Trinity by Bayfield, Trinity Shareholders will own 55 per cent. of New Trinity and Bayfield Shareholders will own 45 per cent. (on a fully diluted basis, assuming Bayfield acquires 100 per cent. of the Trinity Shares and prior to raising any additional equity capital).

·; The Merger constitutes a reverse takeover of Bayfield under the AIM Rules and is conditional, inter alia, upon Bayfield Shareholder approval, the approval by the Takeover Panel of the Rule 9 Waiver, and the consent of the Ministry and Petrotrin. Accordingly, trading in the Company's shares has been suspended pending publication of an Admission Document.

·; Bayfield has received irrevocable undertakings to vote in favour of the Resolutions to, inter alia, approve the Merger at the Bayfield General Meeting from Bayfield Shareholders holding, in aggregate, 109,415,867 Bayfield Shares, representing approximately 50.54  per cent. of the issued share capital of Bayfield.

·; An Admission Document containing details of the Merger and New Trinity will be sent to Bayfield Shareholders in due course.

·; The Boards of Bayfield and Trinity having reached agreement on the Merger, Bayfield has terminated discussions with all other parties regarding a potential offer for the Company and, consequently, the Company is no longer in an offer period.

Commenting on the Merger, Bruce Dingwall CBE, the Executive Chairman of Trinity, said:

"New Trinity will be the leading Trinidad-focused independent E&P company offering investors an attractive balance of existing production, near-term production growth from low risk development opportunities and exciting exploration prospects."

Finian O'Sullivan, Chairman of Bayfield, said:

"The proposed merger offers shareholders the benefits of diversification and scale from an enlarged producing asset base while retaining significant exposure to material near-term potential."

Enquiries

Introduction

The Boards of Bayfield and Trinity are pleased to announce that they have reached agreement on the terms of a conditional merger of Bayfield and Trinity, details of which are set out below.

Bayfield proposes to acquire 100 per cent. of Trinity's issued and to be issued share capital. Trinity Shareholders will receive approximately 7,478 new Ordinary Shares for each Trinity Share held and Trinity's options and warrants will be converted to options and warrants for Bayfield shares at the same exchange ratio. The consideration at Completion will be satisfied by the issue, credited as fully paid, of up to 255,623,207 Consideration Shares.

The Merger will constitute a reverse takeover of Trinity by Bayfield for the purposes of the AIM Rules and, accordingly, trading in the Company's shares has been suspended pending publication of an Admission Document (which will provide further detailed information on the Merger and New Trinity) which will be posted to Bayfield Shareholders in due course.

Background on Trinity

Overview

Trinity is a private independent oil & gas company with onshore and offshore assets in Trinidad. It is led by an executive team with significant Trinidadian and international operating expertise and a track record of value creation for shareholders in the international E&P industry.

Trinity was formed in 2005 when a group of founding shareholders led by Bruce Dingwall CBE acquired Venture Production plc's Trinidad operations. Since then, the business has grown through organic drilling and further acquisitions.

Trinity is headquartered in San Fernando, Trinidad, where the senior management team is based, and has significant local ownership. Trinity employs more than 200 staff and this team has an excellent understanding of the local operating environment and business culture including strong government, supply chain and other stakeholder relationships.

Operations

Trinity operates ten licenses in Trinidad, including two licenses in the Gulf of Paria, offshore Trinidad's West coast, and eight onshore licenses. Trinity's portfolio offers a balance of current production (approximately 2,370 bbl/d net), low risk development opportunities and exploration/appraisal upside.

A map detailing Trinity's licences in Trinidad may be found by clicking here:

http://www.rns-pdf.londonstockexchange.com/rns/6472O_-2012-10-12.pdf

For the year ended 31 December 2011, Trinity made a profit before tax of US$13.4m on turnover of US$53.9m. As at 31 December 2011, Trinity has net assets of US$55.4m.

Background to and reasons for the Merger

During May and June 2012, Bayfield sought to execute an equity financing to strengthen its cash position and fund its ongoing drilling commitments. Despite success in securing a measure of institutional support, Bayfield was unable to complete the fund-raising to the level required at the time due to the deterioration in market conditions. Consequently, the Company commenced a strategic review of its options which has culminated in the Merger.

Completion of the Merger will establish New Trinity as the largest independent Trinidad-focused oil and gas group and, in particular, will:

·; create a diversified onshore, West coast and East coast portfolio of 11 operated fields, gross production of approximately 4,650 bbl/d and net production of approximately 3,800 bbl/d based on current production rates;

·; provide investors with exposure to a balanced mix of existing production, significant near-term production growth opportunities from low risk developments and exposure to multiple exploration prospects with potential to deliver meaningful reserves/resource upside;

·; enable New Trinity to generate operational and commercial synergies; and

·; position New Trinity for further growth through new bid rounds and M&A activity.

Principal terms of the Merger

Pursuant to the Transaction Agreement, the Company has conditionally agreed to purchase Trinity Shares from certain Trinity Shareholders (including all of the executive directors of Trinity) holding, in aggregate, approximately 24.75  per cent. of the current Trinity Shares in issue. The Trinity Shares held by the remaining Trinity Shareholders are proposed to be acquired by the Company upon Admission pursuant to conditional short form acquisition agreements to be entered into between the Company and such Trinity Shareholders. The Merger is conditional, inter alia, upon Bayfield acquiring at least 90 per cent. of the Trinity Shares in issue. As at the date of this announcement, the Company has entered into a short form acquisition agreement with Trinity Shareholders holding, in aggregate, 52.41 per cent. of the Trinity Shares. Accordingly, pursuant to that short form acquisition agreement and the Transaction Agreement, the Company has conditionally agreed to acquire 77.16 per cent. of the Trinity Shares in issue. It is intended that, prior to the date on which the Admission Document is posted to Bayfield Shareholders, one or more additional short form agreements will be entered into between Bayfield and the remaining Trinity Shareholders under which Bayfield will conditionally agree to acquire those remaining Trinity Shares that constitute the remaining 22.84 per cent. of the Trinity Shares.

The Transaction Agreement and the short form acquisition agreements referred to above are conditional, inter alia, upon the following matters:

·; Bayfield Shareholder approval of the Merger;

·; Bayfield acquiring not less than 90 per cent. of the Trinity Shares;

·; certain approvals being received from Petrotrin and the Ministry;

·; the approval by the Takeover Panel of the Rule 9 Waiver; and

·; Admission.

Irrevocable undertakings have been received from Finian O'Sullivan, Andrey Pannikov, Alta Limited, Brian Thurley and Jonathan Cooke to vote and to procure that their associates vote in favour of the Merger at the Bayfield General Meeting in respect of their aggregate holdings of 109,415,867 Ordinary Shares, representing approximately 50.54 per cent. of the current issued ordinary share capital of the Company.

Directors and Proposed Directors

Upon Admission, the board of directors of New Trinity will comprise six directors. Five directors are identified below, with an additional Independent Non-Executive Director to be appointed prior to Admission.

Details of the Board of New Trinity are set out below.

Bruce Dingwall CBE

Bruce has over 30 years' experience in the oil and gas industry. Bruce began his career with Exxon as a geophysicist in the North Sea before moving to Lasmo where he held numerous senior management roles in their South East Asian operations. In 1997, Bruce founded, and was Chief Executive Officer of, Venture Production which grew to production of 55,000 boepd and was sold to Centrica in 2009 for US$2.5 billion. A Trinidadian national, Bruce founded Trinity in 2004 with the acquisition of Venture Production's Trinidad assets. Bruce is a geologist having studied at Aberdeen University.

Joel "Monty" Pemberton

Monty joined Trinity in 2005 as Chief Financial Officer and became Chief Executive Officer in 2009. Under Monty's leadership Trinity has significantly grown its business, through attracting external capital and undergoing a period of rapid organic and M&A- led growth. Monty began his career with Ernst & Young's audit team where he qualified as a Chartered Certified Accountant and worked in both Trinidad and the UK with a focus on energy clients. Monty then moved back to Trinidad working in the Energy finance division of RBTT Merchant Bank prior to joining Trinity. Monty is a Fellow Chartered Certified Accountant from the Association of Certified Chartered Accountants.

Finian O'Sullivan

Finian holds an honours degree in Geology from University College Galway. Finian has pursued an international career in the oil industry spanning 32 years with Chevron, Geophysical Systems, Olympic Oil and Gas and Burren Energy. Finian founded Burren Energy in 1994 and developed its business in Turkmenistan and West Africa leading to Burren's flotation on the London Stock Exchange with a market capitalisation of £175 million in 2003. As Chief Executive, Finian expanded Burren's activities with successful exploration and steady growth in production. In 2008, Burren Energy was sold to Eni for £1.7 billion.

Jon Murphy

Jon joined Trinity's Board at the time of acquisition from Venture Production in 2004 and brings with him over 30 years of experience in mid-cap E&P companies. Jon's career includes several years with Lasmo where he held various positions in geology, planning and new business, based in the UK and Asia. In 1999, Jon joined Venture Production as COO and played a key role in its growth to become one of the leading oil and gas companies in the North Sea. Jon holds a BSc. Geology from the University of London and is also a Non-Executive Director of Hurricane Exploration.

Anthony Brash

Anthony has been involved in the oil and gas industry for over 25 years and is Managing Director of the Well Services Group. Well Services Group is the owner of the largest drilling rig fleet in Trinidad and offers a wide range of other oilfield services as well as being a material onshore oil producer. Anthony has directly negotiated and managed service contracts with BP, EOG, Repsol and Petrotrin. Anthony holds a BA in Management and a MBA in General Business from St. Edward's University in Austin, Texas.

The Takeover Code

End of offer period

The Boards of Bayfield and Trinity having reached agreement on the Merger, Bayfield has terminated discussions with all other parties regarding a potential offer for the Company and, consequently, the Company is no longer in an offer period.

Proposed Rule 9 Waiver

The Takeover Code governs, inter alia, transactions which may result in a change of control of a publiccompany to which the Takeover Code applies. Under Rule 9, any person who acquires an interest (as defined in the Takeover Code) in shares which, taken together with shares in which he is already interested or in which persons acting in concert with him are interested, carry 30 per cent. or more of the voting rights of a company which is subject to the Takeover Code, is required to make a general offer to all the remaining shareholders to acquire their shares.

Similarly, when any person, together with persons acting in concert with him, is interested in shares which, in aggregate, carry more than 30 per cent. of the voting rights of such company, but does not hold shares carrying 50 per cent. or more of such voting rights, a general offer will normally be required if any further interest in shares is acquired by any such person.

An offer under Rule 9 must be in cash and must be at the highest price paid by the person required to make the offer, or any person acting in concert with him, for any interest in shares of the company in question during the 12 months prior to the announcement of the offer.

Persons acting in concert comprise persons who, pursuant to an agreement or understanding (whether formal or informal), co-operate to obtain or consolidate control of a company or to frustrate the successful outcome of an offer for a company. A person and each of its affiliated persons will be deemed to be acting in concert all with each other.

Since it is expected that all the Trinity Shareholders will comprise a concert party for the purposes of the Takeover Code, the Company will request the Takeover Panel to waive the obligation to make a general offer that would otherwise be required as a result of the Merger, subject to the approval of independent shareholders of Bayfield on a poll. The Admission Document will contain further information on the Rule 9 Waiver.

The following definitions apply in this announcement, unless the context otherwise requires: