Press Releases 2009

Rurelec Issues STG £2.5 million Convertible Loan Notes

Details

Published: Thursday, 10 September 2009 17:00

10th September 2009

Rurelec PLC (AIM:RUR), the developer, owner and operator of power generation capacity in Latin America, announces that it has today placed STG £2.5 million of unsecured 12 per cent. convertible loan notes due in March 2011 ("Convertible Loan Notes") to support the refinancing of its Argentine power generation business, Energia del Sur, S.A. ("EdS") and for general working capital purposes. EdS is currently in the process of obtaining a debt rating for its first ever Argentine peso denominated bond issue. Argentine pension funds have agreed to support an EdS bond placing in Argentine pesos subject to EdS obtaining a suitable debt rating from one of the internationally recognised rating agencies. Rurelec's funding of EdS is intended further to strengthen the balance sheet of EdS in anticipation of the grant of a satisfactory debt rating.

Under the terms of the Convertible Loan Notes being issued today, certain existing shareholders in Rurelec have agreed to acquire the Convertible Loan Notes. They carry a coupon of 12 per cent. and they are convertible at an effective conversion price of 25 pence per ordinary share of 2 pence each in the share capital of Rurelec ("Ordinary Share"). Conversion of all the Convertible Loan Notes would result in the issue of 10 million new Ordinary Shares, which is within Rurelec's existing authority to allot new Ordinary Shares. The Convertible Loan Notes will not trade on any exchange but will be transferable.

Subscribers of the Convertible Loan Notes are being granted a total of 10 million transferable warrants to subscribe for new Ordinary Shares on the basis for one new Ordinary Share for each warrant in each case at the same effective conversion price of 25 pence per Ordinary Share ("Warrants"). The exercise of the Warrants is conditional upon the Company having at all times sufficient available authorised but un-issued Ordinary Share capital, free from pre-emptive rights, to permit such exercise. The Company will convene a General Meeting of shareholders at which a resolution to increase the authority to allot shares for this purpose will be proposed. Expiry of the Warrants will be coterminous with the Convertible Loan Notes at March 2011.

Independent Power Corporation PLC, a company controlled by Rurelec's Managing Director, Peter Earl, has agreed to subscribe £700,000 of the Convertible Loan Notes with 2,800,000 Warrants.

Ambrian Partners Limited acted as placing agent and financial adviser to the Company in relation to the Convertible Loan Note issue.

Speaking today Rurelec Managing Director Peter Earl said: "It is of great importance to Rurelec that we complete the refinancing of Energia del Sur. The convertible loan notes placed today will help us to arrange the debt rating in Argentina which we need to complete our local bond issue. We have been successful in arranging local bond issues in Bolivia to finance our expansion in that country. Now we intend to adopt the same strategy in Argentina, taking advantage of the strong local pension fund market for debt rated corporate bonds. We believe that this issue gives the least dilution for the maximum benefit to the Group. We maintain our policy of minimal dilution combined with continuing focus on dividends to Rurelec shareholders."

Enquiries:

This announcement does not constitute, or form any part of, an offer or an invitation to purchase any securities.

This announcement does not constitute an offer of, or the solicitation of any offer to buy, any Ordinary Shares to any person in any jurisdiction to whom or in which such offer or solicitation is unlawful. The distribution of this announcement in certain jurisdictions may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of such jurisdiction.

Ambrian Partners Limited, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for the Company as Placing Agent and Financial Adviser and for no one else in relation to the matters described in this announcement and will not be responsible to anyone other than the Company for providing the protections afforded to customers of Ambrian Partners Limited or for providing advice in relation to the subject matter or contents of this announcement.