Volga Gas: Receives All Cash Offer from GEM Capital Holdings

Summary and Highlights:

The board of directors of GEM Capital Holdings (CY) Ltd is pleased to announce the terms of a cash offer to be made by GEM for the entire issued and to be issued ordinary share capital of Volga Gas plc.

GEM is a private, limited liability, company incorporated in Cyprus with registration number HE401550, wholly owned by Anatoly Paliy, which makes investments directly and through its subsidiaries in, inter alia, specialised chemicals, nanomaterials and technology companies. In addition, Anatoly Paliy holds interests in several oil and gas assets. The consideration payable to Volga Gas Shareholders under the terms of the Offer will be funded by a loan from Anatoly Paliy to GEM.

Volga Gas (AIM: VGAS) is an AIM-quoted, independent oil and gas exploration and production group operating in the Volga Region of Russia, engaged in geological exploration and the production of oil, gas and gas condensate in Saratov and Volgograd, as well as in the Republic of Bashkortostan. Volga Gas has a 100 per cent. interest in five oil and gas licences in the Saratov, Volgograd and Bashkiriya regions.

Under the terms of the Offer, Volga Gas Shareholders will be entitled to receive 23.71 pence in cash for each Volga Gas Share held, valuing the entire existing issued ordinary share capital of Volga Gas at approximately £19.16 million (excluding Treasury Shares).

The Offer Price of 23.71 pence per Volga Gas Share represents:

(i)    a premium of approximately 10.28 per cent. to the Closing Price of 21.50 pence per Volga Gas Share on 6 April 2020 (being the last Business Day prior to the commencement of the Formal Sale Process and resultant Offer Period); and

(ii)   a discount of approximately 3.22 per cent. to the Closing Price of 24.50 pence per Volga Gas Share on 13 November 2020 (being the last Business Day prior to the date of this Announcement).

·       If any dividend, other distribution or return of capital is authorised, declared, made or paid or becomes payable in respect of Volga Gas Shares on or after the date of this Announcement, GEM reserves the right to reduce the Offer Price by the aggregate amount of such dividend, distribution or return of capital.

·       It is intended that the Offer will be implemented by means of a takeover offer under Part 28 of the Companies Act 2006 (although GEM reserves the right to elect to implement the Offer by means of a Scheme of Arrangement (subject to Panel consent)).

·       The Offer will be conditional on valid acceptances of the Offer being received in respect of not less than 90 per cent. (or such lower percentage as GEM may decide) of the Volga Gas Shares to which the Offer relates and of the voting rights attached to those shares.

·       Should GEM receive acceptances to its Offer that represent at least 75 per cent. of the Volga Gas Shares and its Offer becomes, or is declared, wholly unconditional, GEM intends to procure that Volga Gas makes an application to the appropriate authorities for the cancellation of the admission of Volga Gas Shares to trading on AIM. Should GEM proceed with the intended cancellation, a notice period of not less than 20 Business Days will be given on or after the date on which the Offer becomes, or is declared, unconditional in all respects. Should GEM not receive sufficient acceptances to proceed with procuring such an application, then GEM intends, following completion of the Offer, to seek the cancellation of the admission of Volga Gas Shares to trading on AIM under the other provisions set out in Rule 41 of the AIM Rules.

·       The Offer will be subject to the Conditions and further terms set out in Appendix I to this Announcement and to be set out in the Offer Document, which will be despatched to Volga Gas Shareholders within 28 days of this Announcement.

·       One of the Conditions of the Offer, being Condition 1(b)(ii), set out in Appendix I to this Announcement (the “FAS Condition”), is the Federal Antimonopoly Service of the Russian Federation (“FAS Russia”) approving the acquisition of control of Volga Gas, or any subsidiary of Volga Gas, by GEM. The GEM Board is confident that the relevant approval will be forthcoming, such that the FAS Condition will be satisfied within the Panel’s prescribed Code timetable.

·       If Volga Gas Shareholders wish to accept the Offer, it is important that they follow the instructions to be set out in the Offer Document and the accompanying Form of Acceptance.

·       GEM has received irrevocable undertakings to accept (or procure the acceptance of) its Offer from certain institutional and other Volga Gas Shareholders, including the Baring Vostok Funds,  in respect of, in aggregate, 64,710,349 Volga Gas Shares, representing approximately 80.07 per cent. of Volga Gas’s existing issued ordinary share capital (excluding Treasury Shares).

·       Further details of the abovementioned irrevocable undertakings are set out in section 5 of, and Appendix III to, this Announcement.

Thomas Keane, Director of GEM, commented:

“We are delighted to be announcing this all cash offer for Volga Gas. We believe that Volga Gas has significant potential but that, given its size, operating environment and geographic focus, it would fare far better as a private company with a simplified and more cost effective corporate structure, while benefitting from our support and assistance. Our Offer provides Volga Gas Shareholders with a certain cash exit, in full, at a premium to the prevailing market share price, prior to the Company’s launch of its Formal Sale Process.”

This summary should be read in conjunction with, and is subject to, the full text of this Announcement (including the Appendices). The Offer will be subject to the Conditions and certain further terms set out in Appendix I to this Announcement and to the full terms and conditions which will be set out in the Offer Document.

Appendix II to this Announcement contains the sources of certain information and bases of calculation of certain information contained in this Announcement.  Appendix III to this Announcement contains a summary of the irrevocable undertakings in respect of the Offer received by GEM. Appendix IV to this Announcement contains definitions of certain terms used in this summary and the following content of this Announcement.

A copy of this Announcement will be made available, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, for inspection, along with certain other documentation required to be posted online pursuant to the Code, on Volga Gas’s website at www.volgagas.com and on GEM’s website at www.gem.capital.