Sound Energy to Raise £4 million

Source: 6/8/2022, Location: Europe

Sound Energy has conditionally raised £4 million (before expenses) by way of a placing and subscription (together, the "Fundraise") of a total of 200,000,000 new ordinary shares of 1 pence each (each a "Fundraise Share" and together the "Fundraise Shares") in the Company at a price of 2.0 pence per share (the "Issue Price").

Highlights of the Fundraising
• Total of £4 million raised at 2.0 pence per share to progress a number of key value creating projects, principally the pre-development work on the Tendrara Phase 2 pipeline to FID, corporate new ventures activities and corporate G&A
o £2.88 million raised via a placing with institutional and other investors through the issue of 144,225,000 Fundraise Shares (the "Placing")
o £1.12 million raised via a direct subscription with the Company through the issue of 55,775,000 Fundraise Shares (the "Subscription")

• Sound Energy directors participated in the Subscription, subscribing for an aggregate of 60,000 of Fundraise Shares (the "Director Participation")
• The Fundraise Shares have been placed with/subscribed for by institutional and other investors and included participation by Sound Energy's existing shareholder, Afriquia Gaz S.A.

In respect of the Fundraise, SP Angel Corporate Finance LLP ("SP Angel") acted as broker and bookrunner to the Company and Gneiss Energy Limited ("Gneiss") acted as financial adviser and placing agent to the Company.

Graham Lyon, Sound Energy's Executive Chairman, commented:
" Today's Fundraise provides Sound Energy with a stronger financial base in order to progress our activities to deliver planned business growth, including enabling pre-development work up to a final investment decision on our Phase 2 gas pipeline development, and complements the project financing that we have secured for our Phase 1 micro LNG development."

Director participation in the Fundraising
Each of the above directors are deemed to be related parties of Sound Energy under the AIM Rules for Companies (the "AIM Rules") and the directors' participation in the Fundraise constitutes a related party transaction for the purposes of Rule 13 of the AIM Rules (the "Related Party Transaction"). The independent director of Sound Energy, being Mohammed Seghiri, considers, having consulted with the Company's nominated adviser, that the terms of the Related Party Transaction are fair and reasonable insofar as the Company's shareholders are concerned.

The net proceeds of the Fundraise will, together with the Company's unaudited existing cash balances of approximately £1.0 million as at 1 May 2022, be applied towards Phase 2 Tendrara Production Concession pre-development work up to FID, preliminary Anoual exploration pre-drill activities, and provide the Company with additional working capital for corporate and debt servicing purposes.

In the Board's opinion the net proceeds of the Fundraise will, alongside existing cash resources and existing Phase 1 Tendrara Production Concession funding arrangements, be sufficient to continue to advance the Company's projects and meet the Company's present working capital obligations through to April 2023.

Broker Warrants
In connection with the Placing, Sound Energy has agreed to issue broker warrants over a total of 7,056,875 Ordinary Shares to SP Angel and Gneiss exercisable at 2.75 pence per Ordinary Share for a period of three years from Admission of the Fundraise Shares to trading on AIM.

Information on the Fundraising
The Fundraising is conditional, inter alia, upon:
• the Placing Agreement becoming unconditional in all respects (save for Admission) and not having been terminated in accordance with its terms;
• the Subscription Agreements becoming unconditional in all respects (save for Admission); and
• Admission becoming effective on or before 8.00 a.m. on 13 June 2022 (or such later date and/or time as the Company, SP Angel and Gneiss may agree, being no later than 8.00 a.m. on 27 June 2022).

The Fundraise Shares represent, in aggregate, approximately 12.15% per cent. of the existing ordinary share capital of the Company and will represent approximately 10.83% per cent. of the enlarged share capital of the Company upon admission of the Fundraise Shares to trading on the AIM market of the London Stock Exchange ("Admission").

Market soundings (as defined in MAR) were taken in connection with the Fundraising as a result of which certain persons became aware of inside information (as defined in MAR), as permitted by MAR. This inside information is set out in this announcement. Therefore, those persons that received such inside information in a market sounding are no longer in possession of such inside information relating to the Company and its securities.

The person responsible for arranging this announcement on behalf of the Company is Graham Lyon.

Admission and Total Voting Rights
Application has been made for Admission and it is expected that Admission will occur on or around 13 June 2022. The Fundraise Shares will rank pari passu with the existing ordinary shares of 1 pence each in the capital of the Company.

Following the issue of the Fundraise Shares, the total issued share capital of the Company will consist of 1,845,278,630 Ordinary Shares. The Company does not hold any Ordinary Shares in treasury. Therefore, the total number of voting rights in the Company is 1,845,278,630 and this figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FCA's Disclosure and Transparency Rules.

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