SOGP Sovereign Oil

 

TIDMSOGP 
 
RNS Number : 0570S 
Sovereign Oilfield Group plc 
11 May 2009 
 

 
 
The final paragraph under the Funding sub-headline for this announcement, as 
released at 3.00 pm today was incorrect (RNS no 0354S) and has been corrected. 
 
 
The incorrect paragraph read: 
 
 
Signature of the SPA and BPA will now enable publication of the 2008 Annual 
Accounts and the 2008 Interim Report for the six months and thereby the 
restoration of the Company's Ordinary Shares to trading on AIM on Friday 15 May 
2009. 
 
 
The corrected announcement now reads: 
 
 
Signature of the SPA and BPA will now enable publication of the 2008 Annual 
Accounts and the 2008 Interim Report on Friday 15 May 2009 and thereby, 
following this, the restoration of the Company's Ordinary Shares to trading on 
AIM. 
 
 
 
 
 
 
+---------------------------------------+---------------------------------------+ 
| FOR IMMEDIATE RELEASE                 |                           11 May 2009 | 
+---------------------------------------+---------------------------------------+ 
 
 
 
 
SOVEREIGN OILFIELD GROUP Plc 
("Sovereign" or "the Company" or "the Group") 
 
 
 
 
Proposed disposal of Vertec Engineering Limited and the Cabin Rental Fleet of 
Labtech Services Limited ("the Disposals") 
 
 
 
 
Your Board announces today that the Company has entered into, subject inter alia 
to Shareholder approval, a Share Purchase Agreement ("SPA") to dispose of the 
entire issued share capital of Vertec Engineering Limited ("Vertec") and a 
Business Purchase Agreement ("BPA") to dispose of the rental cabin assets of 
Labtech Services Limited ("the Labtech Assets") for a total consideration 
GBP5.45 million to be paid in cash. 
 
 
Vertec and Labtech specialise in the design, engineering and manufacture of 
onshore and offshore engineering cabins, containers, baskets, air conditioning 
and refrigeration units. In addition they both run repair, and refurbishment 
operations as well as a cabin rental service. 
 
 
The gross assets of Labtech and Vertec were GBP1.2 million and GBP2.0 million as 
at 31 March 2008 and the operating profit is approximately GBP0.8 million and 
GBP0.1 million respectively. The figures above are extracted from management 
accounts for the year to 31 March 2008. 
 
 
Cooltime Engineering Services Limited, a wholly owned subsidiary of Vertec, does 
not form part of these Disposals. 
 
 
All of the sale proceeds will be used to pay down existing debt facilities 
with the Existing Lending Consortium. 
 
 
The proposed disposals are deemed to be a 'disposal resulting in a fundamental 
change of the business' for the purpose of AIM Rule 15 as the disposal proceeds 
are in excess of the market capitalisation of the Company at close of business 
on 25 September 2008, being the day prior to the Ordinary Shares being suspended 
from trading on AIM. By virtue of being deemed to be a fundamental change of 
business, the disposal of Vertec and the Labtech Assets is conditional on 
approval of the Shareholders. 
 
 
Remaining businesses of the Company 
 
 
Subject to shareholder approval, the Drilling Division and remaining Fabrication 
Division businesses will be the remaining trading businesses of the Group. As 
such Directors do not consider that the Company will be classed as an investing 
company under Rule 15 of the AIM Rules. 
 
 
For the year to 31 March 2008 the unaudited turnover attributable to the 
Drilling Division and remaining Fabrication Division businesses of the Group was 
GBP87.0 million with a gross profit of GBP21.3 million before the allocation of 
administration costs. The figures above are extracted from management accounts 
for the year to 31 March 2008. 
 
 
Funding 
 
 
These Disposals became a condition of continued banking support from our lender 
group HBOS, Merrill Lynch, Cyrus Partners and Polygon Investment Partners (the 
"Existing Lending Consortium") and consequently the Board has concluded that the 
Group should dispose of Vertec and the Labtech Assets. 
 
 
Sovereign currently has debt facilities of GBP32.8 million comprising GBP16.4 
million senior debt and GBP16.4 million of mezzanine debt from its Existing 
Lending Consortium. They have confirmed continued support of the Group's 
existing banking facilities, subject to certain conditions subsequent, which 
will be met on completion of this transaction. 
 
 
Signature of the SPA and BPA will now enable publication of the 2008 Annual 
Accounts and the 2008 Interim Report on Friday 15 May 2009 and thereby, 
following this, the restoration of the Company's Ordinary Shares to trading on 
AIM. 
 
 
GENERAL MEETING 
 
 
A circular will be sent to shareholders shortly giving notice of a General 
Meeting at which Shareholders will be asked to consider, and if thought fit, to 
approve the Resolutions in order to implement the proposed sale by the Company 
of Vertec and the Labtech Assets. 
 
 
Further information: 
 
 
Sovereign Oilfield Group Plc                        Tel: 01224 261900 
Graham Burgess, Chief Executive Officer 
Julie Cowie, Finance Director 
 
 
Buchanan Communications                         Tel: 0207 466 5000 
Tim Thompson/Catherine Breen 
 
 
Charles Stanley Securities - Nominated AdvisorTel: 0207 149 6000 
Mark Taylor/Freddy Crossley 
 
 
NOTE 
 
 
Sovereign's shares were suspended from trading on AIM on 26 September 2008 
pending publication of the Company's annual report and accounts for the year 
ended 31 March 2008 ("the 2008 Annual Accounts"). The Company also announced on 
26 September 2008 that it was in negotiations with a number of lenders, 
including its existing lenders, regarding a restructuring of the Group's debt 
facilities. 
 
 
 
 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
 DISGUURWAUPBGAG 
 

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