26 July 2022

Advance Energy plc
("Advance Energy" or the "Company")

Placing and Intended Subscription to raise £425,000 in total

The Company announces that it has raised £345,000 (gross), before expenses, by way of a placing (the "Placing") and, in addition, has received intentions to participate in the Placing and a subscription on the same terms as the Placing to raise, in aggregate, a further £80,000 from certain directors (the "Intended Director Participation"). 

The Placing has been arranged by Optiva Securities Limited and comprises the issue to new and existing shareholders of 405,882,354 ordinary shares of no par value ("Ordinary Share") at an issue price of 0.085 pence per Ordinary Share ("Issue Price"), and the issue of one warrant ("Warrant") for every one new Ordinary Share issued. Each Warrant gives the holder the right to subscribe for one new Ordinary Share at a price of 0.13 pence per Ordinary Share at any time from the issue of the Warrant up to (and including) 5.00 p.m. on 26 July 2025 (the "Warrant Exercise Period").

In addition, it is intended that certain directors subscribe for a further 47,058,823 new Ordinary Shares pursuant to the Placing and 47,058,823 new Ordinary Shares pursuant to a subscription directly with the Company at the Issue Price (the "Director Participation Shares"), with such shares also being entitled to one Warrant per Ordinary Share. 

The net proceeds from the Placing and the Intended Director Participation, combined with the Company's existing cash resources, are expected to provide the Company with sufficient working capital to enable it to select, negotiate and pursue an acquisition that would be considered a reverse takeover under the AIM Rules for Companies and specifically fund the required legal, financial, commercial and technical due diligence, including the preparation of the required Competent Persons Report and Admission Document to enable the Company to undertake an acquisition. Any cash consideration which might be payable to conclude an acquisition will require further funds.  There is, however, no guarantee at this stage that any acquisition will be completed.

Larry Bottomley, Interim CEO of Advance Energy said:

"Over the last six months the focus of the Board has been on progressing the deal pipeline. Screening and due diligence has progressed and the Company is now focused on a select number of potentially value accretive deals with an emphasis on proven resources that are intended to provide immediate and sustainable cash flow generation.

"We are now at the stage where we call on the support of third parties to contribute to the relevant due diligence required to progress an acquisition and this funding will allow that work to be undertaken. While the Board is optimistic in progressing an acquisition there is no guarantee at this stage that any transaction will be completed. We will keep the market updated as these projects develop."

Background to the Placing and Intended Director Participation

As previously announced, the Buffalo Licence expired on 27 May 2022 and as a consequence the Company became an AIM Rule 15 cash shell ("AIM Rule 15 Cash Shell") on that date.

As an AIM Rule 15 Cash Shell, the Company is required to make an acquisition, or acquisitions, which constitutes or constitute a reverse takeover under AIM Rule 14 (including seeking re-admission under the AIM Rules for Companies) within six months from 27 May 2022. Alternatively, within such time period, the Company can seek to become an investing company pursuant to AIM Rule 8, which requires, inter alia, the raising of at least £6 million and publication of an admission document.  In the event that the Company does not complete a reverse takeover under AIM Rule 14 within such six month period or seek re-admission to trading on AIM as an investing company pursuant to AIM Rule 8 (either being, a "Re-admission Transaction"), the Company's ordinary shares would be suspended from trading pursuant to AIM Rule 40.  Thereafter, if a Re-admission Transaction has not been completed within a further six month period, admission to trading on AIM of the Company's Ordinary Shares would be cancelled.

The net proceeds of the Placing and Intended Director Participation, together with certain of the Company's existing cash resources, are intended to be used to enable the Company to select and pursue a Re-Admission Transaction.  The Company continues to evaluate a number of oil and gas opportunities, with an emphasis on proven resources that are intended to provide immediate and sustainable cash flow generation in line with its stated strategy.  In that regard, the Company has been active in its screening and initial due diligence processes and has now focused on a small number of potentially value accretive deals.  Should an acquisition opportunity progress the Board expects the net proceeds of the Placing and Intended Director Participation to provide sufficient capital to support the Company in achieving:

·    completion of legal, financial, technical and commercial due diligence of an acquisition target;

·    preparation of a competent persons report on the selected acquisition target; and

·    the preparation of all documentation and approvals required to complete an acquisition.

There is, however, no guarantee at this stage that any acquisition will be completed.

The Company will also issue Warrants to those participating in the Placing and Intended Director Participation, subject to passing the required resolutions to increase the authorities that enable the  issue additional Ordinary Shares pursuant to exercise of the Warrants, exercisable at a 52% premium to the Issue Price.

Warrants are only likely to be exercised once the Company's share price has increased substantially from the Issue Price so there is no guarantee that they will be exercised and further funds received by the Company during the Warrant Exercise Period.

Details of the Placing and Intended Director Participation

The 405,882,354 new Ordinary Shares are being issued to placees ("Placing Shares"), and it is intended that a further 94,117,646 be issued to certain directors pursuant to the Intended Director Participation, at the closing middle market price of 0.085 pence per Ordinary Share, which represents a discount of approximately 22.7% to the closing middle market price on 25 July 2022, being the last business day prior to the announcement of the Placing and the Intended Director Participation.  The Placing Shares have been conditionally placed by the Company and by the Broker as agent of the Company, with certain existing and new investors, subject only to the admission of the Placing Shares ("Admission").  The Placing Shares are being issued and it is intended that the Director Participation Shares would be issued utilising the authorities the Directors were granted at the Company's 2021 Annual General Meeting held on 30 November 2021, to allot shares or rights to subscribe for or to convert any security into shares under the Company's Articles 5.1-5.2 (authority to allot shares) and 5.5 (dealing with pre-emption rights). This authority is sufficient to enable the Company to allot and issue the full amount of Placing and the Director Participation Shares pursuant to the Placing and the Intended Director Participation.   

Further authority (the "Authority") will need to be sought from shareholders to issue the Warrants and new Ordinary Shares potentially arising from the exercise of the Warrants.  The Directors intend to seek such Authority when practicable. Until such time as such Authority is given, the Company will not be permitted to issue all the Warrants / Ordinary Shares that may fall to be issued pursuant to the exercise of such Warrants.

Application has been made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM.  The Placing Shares and any Director Participation Shares will rank pari passu with the existing Ordinary Shares, and it is expected that Admission will become effective and that dealings in respect of the Placing Shares and any Director Participation Shares will commence at 8.00 a.m. on 29 July 2022.  Following Admission, assuming completion of the Intended Director Participation, there would be 1,527,613,961 Ordinary Shares in issue.

The Warrants will not be admitted to trading on AIM or on any other stock exchange and will be issued in certificated form only.  

Enquiries:

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 ("MAR") as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018. Upon publication of this announcement, the inside information is now considered to be in the public domain in accordance with the Company's obligations under Article 17 of MAR.