LONDON: Kistos Plc has provided further information in respect of its proposed acquisition of the entire issued and outstanding share capital of Tulip Oil Netherlands B.V. (“TON”) from Tulip Oil Holding B.V., as announced by the Company on 12 March 2021.

The Acquisition constitutes a reverse takeover for the purposes of Rule 14 of the AIM Rules for Companies and, as such, is conditional, inter alia, upon Shareholder approval.

The Company also announces its intention to issue up to 42,613,743 New Ordinary Shares at a price per share of 155 pence.  This figure comprises 8,742,775 Consideration Shares, which are being issued to Tulip Oil Holding B.V. (the “Vendor”) pursuant to the Acquisition, and between 27,096,774 and 33,870,968 New Ordinary Shares, which are being issued pursuant to the Equity Financing.  The Equity Financing will raise gross proceeds of between £42.0 million and £52.5 million, which will be used to pay the cash consideration payable under the terms of the Acquisition (EUR 60 million) and for general working capital purposes.

The Placing is being conducted through an accelerated bookbuilding process (the “Bookbuild”) which will be launched immediately following this Announcement by Panmure Gordon (UK) Limited (“Panmure Gordon”), in its capacity as sole broker and bookrunner to the Company in connection with the Placing.

The result of the Equity Financing is expected to be announced later today. 

Highlights

·    Kistos proposes the acquisition of the entire issued and outstanding share capital of TON, which, via its wholly-owned subsidiary, Tulip Oil Netherlands Offshore B.V. (“TONO”), owns an operating interest in the Q10-A offshore gas field and interests in other fields in the Dutch North Sea, including the Q10-B, Q11-B and M10/M11 discoveries, and other exploration and appraisal projects.

·    The headline consideration payable by the Company to the Vendor to be satisfied at completion of the Acquisition amounts to EUR 222.75 million, comprising:

(i)    the sum of EUR 60 million in cash;

(ii)   the issuance to the Vendor of Consideration Shares representing a monetary value of EUR 15.75 million credited as fully paid;

(iii)  the issue by TONO of EUR 60 million of Consideration Bond to the Vendor; and

(iv) the refinancing of the existing bonds issued by TONO (the “Existing TONO Bond”) by new bonds to be issued by TONO (the “New TONO Bond”), to the value of EUR 87 million in aggregate, with associated locked box and working capital adjustments.

·    Contingent consideration of up to EUR 163 million (based on an exchange rate of $1.19:EUR 1) is also payable based on the achievement of certain development milestones. For the avoidance of doubt, no warrants will be issued by Kistos in connection with the Acquisition.

·    ABG and Pareto have conditionally agreed to use their reasonable endeavours to place, as agent for the Company, the New TONO Bond which will be used to refinance the Existing TONO Bond. It is expected that the New TONO Bond will be placed, in full, prior to Admission.

·    Following a review conducted by the Board, it has been resolved that, conditional on Admission, Andrew Austin, currently Non-Executive Chairman of the Company, will assume the role of Interim Chief Executive Officer and Richard Benmore, currently Independent Non-Executive Director of the Company, will assume the role of Interim Independent Non-Executive Chairman. The Company will appoint a Chief Financial Offer to its Board within 12 months of Admission.

·    The Company expects to post the Admission Document to those Kistos Shareholders who have elected to receive hard copy documentation from the Company and publish an electronic copy of the Admission Document on its website, www.kistosplc.com on 21 April 2021. The Admission Document includes a notice convening a General Meeting of the Company on at 11.00 a.m. on 14 May 2021.

·    It is anticipated that admission of the Existing Ordinary Shares to trading on AIM will be cancelled and the Enlarged Share Capital will be admitted to trading on AIM shortly following the General Meeting. Admission and dealings in the Enlarged Share Capital are expected therefore to take place on 17 May 2021.

·    Completion of the Acquisition and the issue of the New TONO Bond are expected to take place shortly following Admission.

Andrew Austin, Chairman of Kistos, commented: “I am delighted to be announcing the acquisition, and the associated fundraising, this morning. This represents the culmination of many months of work and is, in my view, a hugely exciting development for stakeholders in Kistos. The portfolio of assets that we have acquired include profitable and cash generative producing assets, plus exploration and appraisal assets from which we are looking to deliver significant upside for our shareholders. Crucially, commercial production from the Q10-A field operated during 2020 with Scope 1 carbon emissions of just 9g CO₂e/boe, compared to an industry average of 22kgCO₂/boe for gas extractions from the UK continental shelf.  We therefore see this acquisition as absolutely in line with Kistos’ strategy of managing assets with a role in Energy Transition.”