Max Petroleum: AGR Energy Invests $13.8m Plus Further Loan Capital

Max Petroleum announces a conditional cash subscription by AGR Energy to raise US$13.8 million (£8.98 million) before expenses for 3,834,590,973 new Ordinary Shares at a price of 0.2341 pence per share such that AGR Energy will hold 63.8% of the Enlarged Issued Share Capital immediately following completion of the Subscription.

As part of the Subscription, AGR Energy will provide an unsecured convertible loan of US$2.0 million (£1.3 million) comprising: (i) a first tranche of US$250,000 (£162,623); and (ii) a second tranche of US$1.75 million (£1.1 million). The loan is conditional upon, inter alia: the appointments of: (i) Mr. Kanat Assaubayev to the Company’s Board as an executive director (Co-Chairman); (ii) Mr. Aidar Assaubayev as a chief executive officer of the Company (but not a member of the Company’s Board) and as the general director of Samek; and (iii) Mr. Alastair Murray as a deputy general director of Samek.

The Subscription will provide working capital to the Company to alleviate its severe immediate financial stress. Further significant financing will be required in the mid and longer term to reestablish going concern status and viability of the business. AGR Energy intends to work with the existing shareholders of the Company progressively to strengthen Max Petroleum’s financial position and evaluate exploration and production upside.

The Subscription Price represents a premium of 46.3% to the closing middle market price of an Ordinary Share of 0.16 pence on 27 February 2015, the date immediately prior to the suspension of the Company’s Ordinary Shares from trading on AIM.

AGR Energy is a vehicle owned by the Assaubayev family established for the purpose of the Subscription. Neither AGR Energy, nor any member of the Assaubayev family nor any of their respective associates (“AGR Energy Group”) currently holds any Ordinary Shares or any other securities in Max Petroleum.

The Subscription is conditional, inter alia, upon each of the following conditions being satisfied on or before the Long Stop Date, being 1 October 2015:

the posting of the Shareholder Circular to Shareholders by no later than 21 August 2015;
the Panel having waived the obligation that would otherwise arise under Rule 9 of the Takeover Code for AGR Energy to make a general offer to all other Shareholders to acquire their Ordinary Shares in the Company;
Shareholders passing resolutions to: (i) approve the Rule 9 Waiver; (ii) grant the Directors the authority to allot the Subscription Shares and Conversion Shares; and (iii) disapply the statutory pre-emption rights arising in respect of those allotments;
the appointment of the Investor Managers and/or Investor Directors not having been terminated;
certain Kazakh regulatory approvals being obtained;
no Insolvency Event having occurred;
Admission becoming effective on or before the Long Stop Date; and satisfaction or waiver by AGR Energy of all conditions to drawdown under the Bridging Loan within the applicable time frame or as otherwise agreed to between the Company and AGR Energy.

Admission of the Company’s Ordinary Shares to trading on AIM will remain suspended until further notice.

James A. Jeffs, Chairman of Max Petroleum, and Kanat Assaubayev, Executive Chairman of AGR Energy, commented:

“We are very pleased to announce this initial funding phase to bring some stability to Max Petroleum’s stakeholders which will, we hope, be the first step in creating value over time.

“The shareholders in AGR Energy have a substantive track record of value creation in emerging markets (both within Central Asia and elsewhere). Substantial value has previously been created from distressed companies by the AGR shareholders.

“AGR Energy looks forward to working with the Max Petroleum Board to stabilise the Company and create the strong foundations from which a successful enterprise can be built. Together we will be aiming to develop a strong and commercially focused business over the coming months and years.

“This transaction sees the conclusion of a process that started over a year ago and it is a testament to both management teams’ resilience that we have finally concluded a process that has seen so many different, primarily unfavourable, changes in the macroeconomic environment in which Max Petroleum operates.

“AGR Energy seeks to create value by directly investing in both businesses and management teams, this process takes time to yield results and stakeholders must be equally patient whilst AGR Energy works with the Max Petroleum board to create value going forwards.”

For more information, please visit: http://www.maxpetroleum.com/