PNG Persian Gold

 

TIDMPNG 
 
RNS Number : 9916N 
Persian Gold PLC 
22 June 2010 
 

                                PERSIAN GOLD PLC 
              PROPOSED ACQUISITION OF HYDROCARBON EXPLORATION PLC 
 
The board of Persian Gold plc ("Persian") is pleased to announce that it has 
entered into an implementation agreement whereby it has agreed to acquire all of 
the outstanding shares of Hydrocarbon Exploration plc ("HyEx") (the 
"Acquisition").  The Acquisition will be achieved by way of a scheme of 
arrangement (the "Scheme").   Persian has requested that dealings in its shares 
be immediately suspended from AIM pending publication of an admission document. 
Details of the Acquisition 
HyEx is a UK plc which was formed when Petrominerales Ltd ("Petrominerales"), a 
Latin American based oil exploration and production company listed on the 
Toronto Stock Exchange, acquired AIM listed Pan Andean Resources plc, and into 
which Pan Andean Resources plc transferred its non-Colombian and non-Peruvian 
assets.  On completion of the transaction, Persian will own 100 per cent. of the 
equity of HyEx, whose assets will be the exploration interests in Bolivia and 
Ghana and royalty income and licences over producing assets in the US. 
Persian has conditionally offered to buy all of the outstanding shares of HyEx 
from the existing shareholders of HyEx on the basis of 2,500 new shares of 
Persian for every one HyEx share held, subject to certain conditions, including 
Persian shareholder approval.  The conditions are set out in the summary of 
principal terms below. 
There are currently 25,537 HyEx shares in issue and 75,172,835 Persian shares in 
issue which would result in HyEx shareholders holding approximately 45.75 per 
cent. of Persian as enlarged by the Acquisition.  At the current Persian share 
price of 6.75p, this values HyEx at approximately GBP4.3 million. It is also 
anticipated that Persian will undertake a placing of new shares to raise 
sufficient working capital for the enlarged group.  As part of the arrangements 
described, the enlarged group will change its name to Clontarf Energy plc. 
The Scheme is subject to regulatory and legal approvals, including approval by 
the High Court of England and Wales and approval of HyEx and Persian 
shareholders.  The final terms of the Offer will be set out in a circular 
expected to be posted to shareholders by the end of September 2010.  The 
transaction is expected to complete by the end of October 2010. 
Owing to HyEx's size, the Acquisition constitutes a reverse takeover of Persian 
under the AIM Rules and therefore a circular will be sent to Persian 
shareholders in due course to convene a general meeting to seek approval for the 
Acquisition. 
 
Background on HyEx 
 
HyEx holds the assets of Pan Andean Resources plc which were not acquired by 
Petrominerales earlier this year, which are summarised as follows.  In the US, 
HyEx receives income from its royalty interests in Block High Island 52  and 63% 
working interest  in Block High Island 30L.in the Gulf of Mexico and small 
royalties from onshore holdings. Oil production from all of these assets is 
declining and is expected to be negligible within two years.  There is a claim 
against HyEx for circa $4 million from Hunt Oil, who operate High Island 30, 
which is disputed. 
HyEx also has a 10% stake in the El Dorado gas field in Bolivia. El Dorado is a 
well located gas field with reserves of over 1 trillion cubic feet. It was a 
BP/Pan Andean joint venture. The BP stake is now owned by Chaco, the Bolivian 
state oil company, which is currently producing 20 million cubic feet of gas a 
day from two wells on the block. 
HyEx holds a 30% interest in the Monteagudo gas/oil field (Repsol 50%, Petrobras 
20%) in Central Bolivia. There is declining production from a number of shallow 
gas wells and a significant deep gas play. 
HyEx is a participant in an oil exploration concession in Ghana, holding a 30 
per cent. interest.  This is the same oil exploration concession in which 
Persian also have a 30 per cent. interest, as announced on 15 April 2010. 
Related Party Transaction 
 
The fact that four of the directors of Persian are also directors and/or 
shareholders of HyEx means that the Offer will constitute a related party 
transaction under the AIM Rules, requiring the remaining director, Dr Manouchehr 
Takin, following consultation with the Company's Nominated Adviser, Cairn 
Financial Advisers LLP, to consider whether the Acquisition is fair and 
reasonable insofar as the Persian shareholders are concerned, which he will do 
at the time of publication of the admission document.  The Acquisition is 
subject to such approval being granted. 
Implementation Agreement 
An implementation agreement setting out the terms and conditions of the Scheme 
has been entered into by Persian and HyEx. Amongst other things the agreement 
governs the relationship between Persian and HyEx during the period until the 
Scheme becomes effective.  A summary of the principal terms and conditions of 
the agreement is set out below.  The Offer, if made, will not fall under the UK 
takeover code or the equivalent takeover regulations in Ireland. 
 
John Teeling, Chairman, commented: 
"This is a good proposal for both companies and I strongly support it.  HyEx 
gets a stock exchange listing which gives liquidity to its shareholders and 
Persian Gold expands its oil and gas portfolio.  The increased scale will make 
the combined venture more acceptable to investors." 
 
Contacts: 
Persian Gold plc 
John Teeling, Chairman                                      +353 1 833 2833 
James Finn, Finance Director                             +353 1 833 2833 
 
Nominated Adviser 
Cairn Financial Advisers LLP                           +44(0) 20 7148 7900 
James Caithie 
 
Broker and Financial Adviser 
Alexander David Securities Limited                    +44(0) 20 7448 9800 
Ian Rice 
 
College Hill                                                       +44(0) 20 
7457 2020 
Nick Elwes 
 
A summary of the principal terms and conditions of the implementation agreement 
is set out below: 
Implementation of the Scheme is conditional upon (among other things): 
·     Approval of Persian and HyEx shareholders 
·     The sanction of the Scheme by the Court 
·     Persian and HyEx obtaining all necessary consents and approvals to 
implement the acquisition contemplated by the Scheme 
·     The warranties provided by HyEx and Persian pursuant to the implementation 
agreement being true and correct in all material respects at the effective date 
of the Scheme 
·     The implementation agreement not having been terminated 
·     Related Party Transaction approval (as set out above) having been granted 
The parties are required to use reasonable endeavours to satisfy the conditions. 
The implementation agreement can be terminated by either party by (among other 
things): 
·     Mutual written consent of Persian and HyEx. 
·     By either party if certain conditions set out in the implementation 
agreement are not fulfilled on or before 31 October 2010. 
The implementation agreement contains customary non-solicitation provisions. 
HyEx must pay Persian a break fee of up to a maximum of GBP250,000 if the Scheme 
is not approved by the requisite majority of HyEx Shareholders or the Scheme is 
not sanctioned by the Court or the board of HyEx fail to make any of its 
recommendations, approvals, resolutions or determinations required in relation 
to the Scheme or withdraws, modifies or changes its recommendations, approvals, 
resolutions or determinations in a manner adverse to Persian. 
HyEx must pay Persian a break fee of GBP450,000 if: 
·           the board of HyEx fail to publicly reaffirm its recommendations of 
the Scheme; 
·           the board of HyEx recommend the shareholders of HyEx vote for an 
offer by a third party; 
·           the agreement is terminated  to permit  HyEx enter into an 
acquisition agreement with a third party; or 
·           a third party proposal is announced or offered to shareholders of 
HyEx in advance of the meetings of the HyEx shareholders and they fail to 
approve the resolutions and the third party acquisition is completed within 
twelve months of such shareholder meetings. 
Persian must pay HyEx an amount equal to HyEx's expenses directly relating to 
the Scheme to a maximum of GBP250,000 in the event HyEx terminates the 
implementation agreement following a failure by Persian to fulfil certain 
conditions relating to its obligation to implement the Scheme. 
Representations and warranties have been given by each of Persian and HyEx 
including in relation to corporate capacity, authorisation and the accuracy of 
certain information provided to each party. 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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