Press Releases 2010

Placing of 11 Million New Ordinary Shares

Details

Published: Tuesday, 18 May 2010 12:54

Rurelec PLC (AIM:RUR), the power plant developer and owner-operator of power generation assets in Latin America, announces that it has today placed a total of 11 million new ordinary shares of 2 pence each ("the Placing Shares") at a price of 10 pence per share to raise £1.1 million before expenses ("the Placing").

Religare Capital Markets plc, (formerly Religare Hichens Harrison), co-broker to Rurelec, acted in the Placing, which is conditional upon admission of the Placing Shares to trading on AIM.

Part of the net proceeds from the Placing will be used to fund the cost of Rurelec's compensation claim against the Government of Bolivia for the nationalisation ("Nationalisation") of its subsidiary's controlling stake in Empresa Guaracachi SA ("Guaracachi"). The Nationalisation was a part of the May Day programme in which three of the privately-owned power generating companies, a regional distribution company and a national electricity transmission company were brought into state ownership by means of a Supreme Decree issued by Bolivia's President Evo Morales (the "Decree"). 

The remaining proceeds of the Placing will be used to provide working capital to the Company to replace, in-part, a dividend from Guaracachi which had been declared but was unpaid at the time of the Nationalisation.

The Placing

The Placing Shares have been allotted subject only to admission to trading on AIM ("Admission"). Admission is expected to take place on 24 May 2010.  The Placing Shares will in aggregate represent 5.1 per cent. of the enlarged share capital of Rurelec. The total enlarged issued share capital of Rurelec following Admission will be 216,421,505 Ordinary Shares (the "Enlarged Issued Share Capital"). The above figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the Disclosure and Transparency Rules.

The Placing Shares have been placed with existing and other institutional shareholders, including Independent Power Corporation PLC ("IPC"). IPC, a company controlled by Peter Earl (Managing Director of Rurelec), of which Elizabeth Shaw (Finance Director of Rurelec) is also a Director, has agreed to subscribe for a total of 2,500,000 Placing Shares at the placing price of 10 pence per Placing Share (the "Placing Price"). IPC has agreed that it will not dispose of the 2,500,000 Ordinary Shares subscribed for by it pursuant to the Placing for a period of twelve months following issue without agreement with Rurelec's broker. Following Admission, IPC will be interested in 21,631,765 Ordinary Shares, representing 10.0 per cent. of the Company's Enlarged Issued Share Capital. As a result of IPC's participation in the Placing, Peter Earl will be interested in 33,444,486 Ordinary Shares at Admission, representing 15.4 per cent. of the Company's Enlarged Issued Share Capital, including the Ordinary Shares held by IPC.

Jimmy West Associates Ltd, a company owned and controlled by James West, will subscribe for 500,000 Ordinary Shares at the Placing Price.  Following Admission, James West will be interested in 2,870,230 Ordinary Shares, representing 1.3 per cent. of the Company's Enlarged Issued Share Capital.

Working Capital

The absence of the dividend from Guaracachi and a delay in the payments of Inciso C from CAMMESA, has put the Company and its 50% owned subsidiary Energia del Sur ("EdS") respectively, under short term financial pressure. Approximately £600,000 of net proceeds will be used by the Company to pay trade creditors and unpaid interest accrued on loans, including those from IPC .

The directors expect that EdS will be in a position to refinance its loan with Standard Bank within the next two months, following the filing of its Resolution 220 contract and subject to a Moody's rating.  The refinancing will allow EdS to start repaying loans and interest on funds lent by Rurelec.

The net proceeds of the fundraising will not provide the Company with sufficient working capital to satisfy its total medium and long term requirements, without the anticipated refinancing of the Standard Bank loan or the extension of current facilities due to expire during the current financial year. An announcement will be made at the appropriate time if there is any further change in the financial condition of the Group.

Indebtedness

Following the Placing the aggregate principal indebtedness of Rurelec PLC (as opposed to Rurelec Group) will be approximately £7.9m.  Loans due to Rurelec from subsidiaries (principally EdS) amount to approximately $36m (£24m).  The aggregate due to Standard Bank from Rurelec's 50% subsidiary, EdS, is currently approximately US$11.5m and does not form part of the Company's indebtedness.

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