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Kea Petroleum PLC  -  KEA   

Issue of Convertible Loan Notes

Released 07:00 10-Jan-2014

RNS Number : 3405X
Kea Petroleum PLC
10 January 2014

For Immediate Release

10 January 2014


Kea Petroleum plc

("Kea" or the "Company")

Issue of Convertible Loan Notes and Equity Finance Facility

Kea Petroleum plc (AIM: KEA), the oil and gas company focused on New Zealand, is pleased to announce that it has entered into an agreement with Darwin Strategic Limited ("Darwin") to issue up to £1.2 million of Convertible Loan Notes ("CLNs"). Kea has also signed an equity finance facility ("EFF") of up to £5.0 million with Darwin.

Convertible Loan Notes

A first tranche of £200,000 of CLNs has today been issued, in integral units of £50,000 at a price of £45,000 per unit.  Darwin has agreed to subscribe for up to an additional £1.0 million loan notes of principal value for a consideration of £900,000. The remaining CLNs will be issued in five equal tranches of £200,000 in integral units of £50,000 at a price of £45,000 per unit. Each tranche will be made available at intervals of 25 trading days, commencing on 14 February 2014 with the final investment expected to be made on 10 July 2014. 

The CLNs are convertible into Ordinary Shares of the Company ("Shares") at Darwin's option at the lesser of 3 pence per Share, or 94% of  the volume-weighted average prices of the Shares on three trading days (selected at the discretion of Darwin) during the 20 trading days preceding the date of conversion. The investment in each subsequent tranche is conditional, inter-alia, on the share price of the Company being no less than 80% of the price at the close of the trading day prior to the initial loan note being issued on all but two trading days following the date of the preceding issuance, unless both the Company and Darwin otherwise consent.

The CLNs are repayable 18 months after their issue, or earlier on the occurrence of certain events, and may be redeemed by the Company for cash at any time during their term, subject to a small redemption premium. They are interest free and unsecured, ranking at least pari passu with all Kea's other indebtedness other than certain existing debt.

Proceeds of the issue of CLNs are intended to be used to support the ongoing working capital needs of the Company. 

The Company has today issued 2,823,529 Shares to Darwin in satisfaction of Darwin's fee of £60,000 for arranging the issue of the CLNs.  Application will be made for these Shares to be admitted to trading on AIM and trading is expected to commence on 16 January 2014.


In connection with issue of the CLNs, the Company has issued to Darwin 12,000,000 warrants to subscribe for Shares priced at 2.6563p per Share being a 25% premium to the closing share price on 8 January 2014 (the "Warrants").  The Warrants are exercisable until 16 January 2017.


For further information please contact:


Kea Petroleum plc

David Lees, Executive Director


Tel: +44 (0)20 7340 9970


WH Ireland Limited (NOMAD)

James Joyce

Nick Field


Tel: +44 (0)20 7220 1666

Darwin Strategic Ltd.

Anand Sambasivan

Jamie Vickers


Tel +44 (0) 20 7491 6512


Mark Court

Sophie Cowles


Tel: +44 (0)20 7466 5000


Notes to Editors


Kea Petroleum is an AIM listed oil and gas exploration company with interests in three petroleum exploration permits in the Taranaki Basin of New Zealand. Kea listed on the London AIM market in February 2010.



Key Terms of the EFF

Kea has also today signed an equity finance facility of £5.0 million with Darwin. The facility becomes available once the CLNs have been fully converted or repaid, and entitles, but does not oblige, Kea to require Darwin to subscribe for Shares in the Company.

The timing and minimum subscription price of any draw down is always at Kea's complete control and sole discretion. There is no interest and no penalty fees are payable for undrawn amounts.

Kea is under no obligation to make a draw down and may make draw downs at its discretion, up to the total value of the EFF, by way of issuing subscription notices to Darwin. Following delivery of a subscription notice, Darwin will subscribe and the Company will allot new Shares to Darwin.

The subscription price for any new Shares to be subscribed by Darwin under a subscription notice will be the average of the three lowest closing bid prices of the Shares over a pricing period of the 15 trading days (or less if agreed by Kea and Darwin) following the date of the subscription notice.

Kea is able to specify in each subscription notice a minimum price below which Ordinary Shares will not be issued to Darwin. The Company will have the right (with the consent of Darwin) to modify that minimum price at any time during the relevant pricing period.

The number of Shares, which may be issued under any individual subscription notice, is limited to the lower of 25 per cent. of the Company's issued share capital following completion of the relevant subscription, or four times the average daily trading volume of the Shares over the 15 trading days preceding the date of the issue of the relevant subscription notice. This may be reduced in certain circumstances, including where the minimum price is not maintained, or in the event that trading is suspended.

The maximum amount of an individual subscription notice may not exceed £500,000 without Darwin's permission. Darwin is entitled to a commission of up to 5 per cent. of amounts subscribed but may agree with Kea in lieu thereof for the subscription price for the Ordinary Shares to be discounted by 5 per cent.

There is also an over-allotment facility available to Kea, under which it may authorise Darwin, at Darwin's discretion, to increase the amount of the draw down by up to the aggregate undrawn amount under the EFF.

The issuance of a Subscription Notice is conditional upon the satisfaction of certain conditions which have been agreed between Darwin and Kea. Any subscription notice which Kea may issue will only be valid to the extent that it has the requisite shareholder authority to issue the maximum number of Shares that Darwin may be required to subscribe under the relevant subscription notice.

Darwin may terminate the EFF agreement if certain conditions are not met. Kea may terminate the agreement on 3 months' notice. The EFF agreement contains certain customary warranties and indemnities given by the Company.

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Issue of Convertible Loan Notes - RNS