WRES.L Regulatory News (WRES)

22 May 2009 15:00



Caspian Holdings Plc

("Caspian" or the "Company")

22 May 2009

Debt for Equity Swap Agreement with Noteholders and Creditors

Further to the Company's announcement of 11 February 2009, the Directors of Caspian have been in discussions with its noteholders and creditors and have now reached an agreement to convert the majority of the Company's outstanding debt to equity including the outstanding loan notes and major creditors owing. The proposed conversion of this debt will be at a price of £0.005 per ordinary share and will result in the issue of 230,423,326 ordinary shares.

Related Party Transactions

Noteholders

Masterman Investments Limited (a company related to Michael Masterman, a director of Caspian) and Beronia Investment PTY LTD (a company related to Byron Pirola, a director of Caspian) will be issued 53,181,506 ordinary shares and 31,908,904 ordinary shares respectively in consideration for their interest in the outstanding loan notes. The shares issued to Masterman Investments Limited and Beronia Investment PTY LTD are therefore classified as related party transactions for the purposes of the AIM Rules. Accordingly the Directors (other than Michael Masterman and Byron Pirola), having consulted with Grant Thornton UK LLP (in its capacity as the Company's nominated adviser), confirm that they are satisfied that the terms of Masterman Investments Limited and Beronia Investment PTY LTD's participation in the conversion are fair and reasonable insofar as the shareholders of the Company are concerned.

Major Creditors

Michael Masterman, a director of Caspian, and Michael Garland, a director of Caspian will be issued 49,442,504 ordinary shares and 10,800,000 ordinary shares respectively in lieu of fees owed in relation to the performance of their duties as directors of the Company for the period from December 2006 to January 2009. The shares issued to Michael Masterman and Michael Garland are therefore classified as related party transactions for the purposes of the AIM Rules. Accordingly the Directors (other than Michael Masterman and Michael Garland), having consulted with Grant Thornton UK LLP (in its capacity as the Company's nominated adviser), confirm that they are satisfied that the terms of Michael Masterman and Michael Garland's participation in the conversion are fair and reasonable insofar as the shareholders of the Company are concerned.

Following this issue of shares, the Company will have 362,072,011 Ordinary Shares of 0.1p in issue assuming that no further shares are issued by the Company in the interim period.

The increase in the authorised capital and the associated share placements as detailed above will be subject to shareholder approval and a circular and notice convening a General Meeting of shareholders will be sent to shareholders shortly. In the event that this reorganisation is not finalised and debt for equity swap is not approved the Company will not be able to meet its obligations when they fall due.

Following the above conversions, Michael Masterman will be interested in 141,694,010, ordinary shares in the Company representing an interest of 39.13% in the total voting rights of the Company. In addition, Michael Masterman is interested in 6,250,000 options over ordinary shares in the Company as follows:

Stock Options Held Option Exercise Price Expiry Date

5,000,000 £0.04 31 December 2010

1,250,000 £0.03 31 December 2010

Following the above conversions, Byron Pirola will be interested in 41,305,904 ordinary shares in the Company representing an interest of 11.41% in the total voting rights of the Company. In addition, Byron Pirola is interested in 3,750,000 options over ordinary shares in the Company as follows:

Stock Options Held Option Exercise Price Expiry Date

2,500,000 £0.04 31 December 2010

1,250,000 £0.03 31 December 2010

Following the above conversions, Michael Garland will be interested in 10,800,000 ordinary shares in the Company representing an interest of 2.98% in the total voting rights of the Company.

Creditors have been supportive as the Company has worked through the proposed restructuring and debt for equity swap with noteholders as indicated above.

With the support of noteholders and creditors, the Company can continue to trade through to June 2009 when the proposed realisation of field equipment will commence. Failure to complete the proposed debt equity swap or actions by creditors would result in the Company not being able to continue to trade.

The Company will continue to update the market as required under the AIM Rules.