| Fri 25 Feb 2011, 17:07 | | IPS - IPSA GROUP PLC - Placing of 12.5 million new ordinary shares at 8 pence to |
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IPS
IPSA
IPS - IPSA GROUP PLC - Placing of 12.5 million new ordinary shares at 8 pence to
raise GBP1 million to fund the start-up of the Newcastle Cogeneration Plant and
working capital
IPSA GROUP PLC
(Incorporated and registered in England and Wales)
(Registration Number 5496202)
AIM Share Code IPSA ISIN GB00BOCJ3F01
JSE Share Code IPS ISIN GB00BOCJ3F01
("IPSA" or "the company")
Placing of 12.5 million new Ordinary Shares at 8 pence to raise GBP1 million to
fund the start-up of the Newcastle Cogeneration Plant and working capital
IPSA GROUP PLC (AIM:IPSA), the developer, owner and operator of power generation
capacity in Southern Africa, announces that it has today placed a total of 12.5
million new ordinary shares of 2 pence each ("the Placing Shares") at a price of
8 pence per share to raise GBP1 million before expenses ("the Placing").
The Placing
The Placing Shares have been allotted subject only to admission to trading on
AIM ("Admission"). Application will be made for the placing shares to be
admitted for trading on AIM, with Admission expected to take place on 3rd March,
2011.
The Placing Shares will in aggregate represent just over 11.6 per cent of the
enlarged share capital of IPSA.The total enlarged issued share capital of IPSA
following Admission will be 107,504,081 Ordinary Shares (the "Enlarged Issued
Share Capital"). The above figure may be used by shareholders as the denominator
for the calculations by which they will determine if they are required to notify
their interest in, or a change to their interest in, the share capital of the
Company under the Disclosure and Transparency Rules.
The Placing Shares have been placed with certain existing and new shareholders.
Subscribers to the Placing include Sterling Trust Limited, which will subscribe
for 10,000,000 shares at the Placing price. As a result, under the AIM Rules
for Companies, the Placing is deemed to be a related party transaction. The
independent directors of the Company consider, having consulted with the
Company`s Nominated Adviser, Execution Noble & Company Limited, that the terms
of Placing are fair and reasonable insofar as shareholders of the Company are
concerned.
The net proceeds of the fundraising will not provide the Company with sufficient
working capital to satisfy its total medium and long term requirements, without
the refinancing of the Company`s loans to its subsidiary, Newcastle Cogeneration
(Pty) Limited ("NewCogen"), the sale of the four Turbines to repay the Standard
Bank loan and other trade creditors or the extension of the repayment period
under the Loan Notes, therefore as previously announced working capital remains
extremely tight. An announcement will be made at the appropriate time if there
is any further change in the financial condition of the Group.
Plan to commence operations at NewCogen
With the funding raised in the Placing, IPSA is planning on restarting the
Newcastle cogeneration plant in March following final agreement on a gas supply
contract with Spring Lights Gas (Pty) Limited. Funds from the Placing will be
used to provide the required security and deal with certain trade creditors of
NewCogen and provide NewCogen with working capital over the start-up period.
With the gas agreement in place, NewCogen will be in a position to commence
sales of electricity to Eskom under the medium term power purchase agreement
dated 26th August 2010.
Working Capital
The bulk of the funds will be used to provide the group with working capital to
re-commence operations at the cogeneration plant at Newcastle KwaZuluNatal,
South Africa.
On 6th December 2010, the Company announced that Sasol Gas Limited ("Sasol
Gas"), which is the monopoly gas-producer and primary supplier of gas in South
Africa, has commenced legal action against NewCogen, for sums claimed under the
gas supply agreement terminated in August 2009 amounting to approximately GBP4m.
To date no further action has been taken.
Outstanding debt, accrued interest and other creditors of the Group currently
amount to approximately GBP37m, with the bulk of funds owed by the Company.
Approximately GBP31m of the total outstanding debt was subject to a standstill
agreement with Standard Bank PLC and Turbocare SpA following execution of an
agreement on 5th March 2010, which expired on 21st February 2011. The Company
is in discussions with the bank and Turbocare regarding repayment timescales for
these amounts.
Change to terms of IPSA Warrants
Further to the announcement on 9 March 2010 in connection with warrants issued
to certain loan note holders ( the "Loan Notes" and the "Warrants"), as a result
of the Placing any shares issued under the Warrants will now be issued at 8p per
share. Accordingly, Warrants for the issue of a total of 8,125,000 are
outstanding and are exercisable at any time until 31st October 2013.
Richard Linnell, Chairman comments: "We were very pleased indeed to have reached
terms with our new gas provider Spring Lights, and now as a result of this
support of our shareholders we expect to be in a position to commence operations
within the coming weeks."
For further information contact:
Peter Earl, CEO, IPSA Group PLC +44 (0)20 7793 5615
John Llewellyn-Lloyd / Harry Stockdale, Execution Noble & Company Ltd +44
(0)20 7456 9191
Riaan van Heerden,PSG Capital (Pty) Ltd +27 (0)21 887 9602
London
25 February 2011
Date: 25/02/2011 17:07:41 Produced by the JSE SENS Department.
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