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Regulatory Story
Company Range Resources Limited
TIDM RRL
Headline Notice of Meeting and Indepent Expert's Report
Released 07:00 01-Feb-2019
Number 7008O07

RNS Number : 7008O
Range Resources Limited
01 February 2019
 

Notice of Meeting 

 

Range, an international company with oil and gas projects and oilfield service businesses in Trinidad and Indonesia, today releases its Notice of Meeting and Independent Expert's Report (IER). A copy of the full Notice of Meeting and IER is available on the Company's website www.rangeresources.co.uk and also the Australian Securities Exchange website www.asx.com.au (ASX code: RRS).

 

 

 

 

Notice of General Meeting

 

Notice is given that the Meeting will be held at:

Time:                  10:00am (WST)

Date:                  5 March 2019

Place:                 Edwards Mac Scovell

Level 7, 140 St Georges Terrace

                             PERTH WA 6000

 

 

 

 

 

Important

The business of the Meeting affects your shareholding and your vote is important.

This Notice of General Meeting should be read in its entirety.  If Shareholders are in doubt as to how they should vote, they should seek advice from their professional advisers prior to voting.

The Directors have determined pursuant to Regulation 7.11.37 of the Corporations Regulations 2001 (Cth) that the persons eligible to vote at the Meeting are those who are registered Shareholders at 7:00pm (Sydney time) on 3 March 2019.

Business of the Meeting

Agenda

1.          Resolution 1 - Approval to issue Shares to LandOcean

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:

"That, for the purposes of item 7 of section 611 of the Corporations Act, and for all other purposes, approval is given for the Company to issue Shares to LandOcean in accordance with the Subscription Agreement and the acquisition by LandOcean and its Associates of a relevant interest in the issued voting shares of the Company resulting from the issue of Shares in accordance with the Subscription Agreement and on the conversion of Convertible Notes held by LandOcean, which is otherwise prohibited by section 606(1) of the Corporations Act, and which may result in LandOcean's and its Associates voting power in the Company increasing to a maximum of 32.6% and otherwise on the terms and conditions set out in the Explanatory Statement."

Voting Exclusion

No votes may be cast in favour of this Resolution by:

(a)           the person proposing to make the acquisition and their associates; or

(b)          the persons (if any) form whom the acquisition is to be made and their associates.

Accordingly, the Company will disregard any votes cast on this Resolution by LandOcean and any of its Associates.

Independent Expert's Report: Shareholders should carefully consider the report prepared by the Independent Expert for the purposes of the Shareholder approval required under item 7 of section 611 of the Corporations Act. The Independent Expert's Report comments on the fairness and reasonableness of the transaction the subject of this Resolution to the non-associated Shareholders in the Company and concluded that the issue of Shares to LandOcean and its Associates is FAIR AND REASONABLE to the non-associated Shareholders in the Company.

Dated: 30 January 2019

By order of the Board

 

 

Nick Beattie
Company Secretary

 

Voting in person

To vote in person, attend the Meeting at the time, date and place set out above. 

Voting by proxy

To vote by proxy, please complete and sign the enclosed Proxy Form and return by the time and in accordance with the instructions set out on the Proxy Form.

In accordance with section 249L of the Corporations Act, Shareholders are advised that:

·                 each Shareholder has a right to appoint a proxy;

·                 the proxy need not be a Shareholder of the Company; and

·               a Shareholder who is entitled to cast 2 or more votes may appoint 2 proxies and may specify the proportion or number of votes each proxy is appointed to exercise.  If the member appoints 2 proxies and the appointment does not specify the proportion or number of the member's votes, then in accordance with section 249X(3) of the Corporations Act, each proxy may exercise one-half of the votes.

Shareholders and their proxies should be aware that changes to the Corporations Act made in 2011 mean that:

·                 if proxy holders vote, they must cast all directed proxies as directed; and

·                any directed proxies which are not voted will automatically default to the Chair, who must vote the proxies as directed.

United Kingdom (CREST Voting Instruction)

DI Holders in CREST may transmit voting instructions by utilising the CREST voting service in accordance with the procedures described in the CREST Manual. CREST personal members or other CREST sponsored members, and those CREST members who have appointed a voting service provider, should refer to their CREST sponsor or voting service provider, who will be able to take appropriate action on their behalf.

In order for instructions made using the CREST voting service to be valid, the appropriate CREST message (a "CREST Voting Instruction") must be properly authenticated in accordance with Euroclear's specifications and must contain the information required for such instructions, as described in the CREST Manual (available via www.euroclear.com/CREST).  

To be effective, the CREST Voting Instruction must be transmitted so as to be received by the Company's agent (3RA50) no later than 27 February 2019 at 4:00pm (GMT). For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the CREST Voting Instruction by the CREST applications host) from which the Company's agent is able to retrieve the CREST Voting Instruction by enquiry to CREST in the manner prescribed by CREST. DI Holders in CREST and, where applicable, their CREST sponsors or voting service providers should note that Euroclear does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the transmission of CREST Voting Instructions. It is the responsibility of the DI Holder concerned to take (or, if the DI Holder is a CREST personal member or sponsored member or has appointed a voting service provider, to procure that the CREST sponsor or voting service provider takes) such action as shall be necessary to ensure that a CREST Voting Instruction is transmitted by means of the CREST voting service by any particular time.

In this connection, DI Holders and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.

 

 

United Kingdom (Form of Instruction) 

DI Holders are invited to attend the Meeting but are not entitled to vote at the Meeting. In order to have votes cast at the Meeting on their behalf, DI holders must complete, sign and return the Forms of Instruction forwarded to them along with the Notice to the Company's agent, Computershare UK, by 27 February 2019 at 4:00pm (GMT)

Should you wish to discuss the matters in this Notice of Meeting please do not hesitate to contact the Company by telephone on +61 8 6205 3012 or +44 (0) 20 3865 8430.

 

 

 

Explanatory Statement

This Explanatory Statement has been prepared to provide information which the Directors believe to be material to Shareholders in deciding whether or not to pass the Resolutions.

1.          Resolution 1 - Approval to issue Shares to LandOcean

1.1           Background

As announced on ASX on 31 October 2016, Range entered into a convertible note deed (Convertible Note Agreement) with LandOcean Energy Services Co., Ltd. (LandOcean) pursuant to which LandOcean subscribed for US$20,000,000 worth of unlisted unsecured Convertible Notes with an annual interest rate of 8% which have a face value of US$1.00 each (Convertible Notes).

The Company and LandOcean are parties to the Integrated Master Services Contract dated 29 May 2014 (IMSC) under which LandOcean provides various oilfield services to the Company. A subsidiary of the Company is also party to an agreement for the provision of oil and gas consultancy, petroleum, equipment rental, property management and labour and procurement services in Trinidad (Trinidad Agreement). As at the date of entering into the Convertible Note Agreement the Company had incurred fees of approximately US$35,900,000 under the IMSC and the Trinidad Agreement (Accrued Fees).

Pursuant to a deed executed by the Company and LandOcean, LandOcean agreed to waive its entitlement to US$20,000,000 of the Accrued Fees in exchange for the issue of the Convertible Notes (IMSC Amending Deed). The Convertible Notes were issued on 28 November 2016 conditional on shareholder approval, which was obtained on 7 February 2017. The proceeds from the Convertible Notes were utilised solely to replace a portion of the outstanding payable balance due to LandOcean under the terms of the IMSC and the IMSC Amending Deed.

Under the Convertible Note Agreement, the Company must pay yearly interest instalments in cash on each anniversary of the issue date of the Convertible Notes.

On 20 December 2018, the Company announced the Company and LandOcean had entered into a subscription and variation agreement (Subscription Agreement) pursuant to which LandOcean has agreed to defer the payment date for the total amount of interest due and payable by the Company to LandOcean under the Convertible Note Agreement on the interest payment date falling in the 2018 calendar year, being US$1,600,000 (Accrued Interest), and to allow the Company to pay the Accrued Interest by way of issuance of Shares to LandOcean on the terms and conditions of the Subscription Agreement, including the Company obtaining Shareholder approval for the issuance.

Details of the material terms and conditions of the Convertible Note Agreement and the Subscription Agreement are set out below.

1.2           Shareholder approval requirements

On 7 February 2017, the Company previously obtained Shareholder approval pursuant to item 7 of section 611 of the Corporations Act for the issue of Shares on conversion of the Convertible Notes which would otherwise be prohibited by section 606(1) of the Corporations Act (Prior Approval).

Given the additional Shares to be issued pursuant to the Subscription Agreement the maximum voting power that may be acquired by LandOcean and its Associates as approved under the Prior Approval may be exceeded.  On this basis, the Company is seeking fresh Shareholder approval for the purpose of item 7 of section 611 of the Corporations Act to allow the Company to issue Shares to LandOcean pursuant to the Subscription Agreement as well Shares on conversion of the Convertible Notes.

ASX Listing Rule 7.1 provides that a company must not, subject to specified exceptions, issue or agree to issue more equity securities during any 12 month period than that amount which represents 15% of the number of fully paid ordinary securities on issue at the commencement of that 12 month period.

Pursuant to ASX Listing Rule 7.2 (Exception 16), ASX Listing Rule 7.1 does not apply to an issue of securities approved for the purpose of item 7 of section 611 of the Corporations Act.  Accordingly, if Shareholders approve the issue of securities pursuant to this Resolution 1, the Company will retain the flexibility to issue equity securities in the future up to the 15% annual placement capacity set out in ASX Listing Rule 7.1.

1.3           About LandOcean

LandOcean is headquartered in Beijing, China and is active both in the international and domestic Chinese markets by serving the oil and gas industry with a wide spectrum of services, from R&D of high-end technology, to product sales and technical services. LandOcean is a listed high-tech company on the Growth Enterprise Market of the Shenzhen Stock Exchange (Stock code: 300157).

LandOcean's capabilities include: a) R&D and commercialization of petroleum exploration and development software, oil and gas equipment, downhole equipment, as well as instrument technology; b) global sales of petroleum exploration and development software, oil and gas equipment, downhole equipment, as well as instrument technology; and c) providing technical services utilizing petroleum exploration and development software, oil and gas equipment, downhole equipment, as well as instrument technology.

1.4           Convertible Note Agreement

The material terms of the Convertible Note Agreement are as follows:

(a)                Convertible Notes

LandOcean (or its Associates) has subscribed for US$20,000,000 of unlisted unsecured convertible notes with an 8% per annum coupon which have a face value of US$1.00 each.

The Convertible Notes are redeemable by LandOcean after 3 years of issue (Maturity Date) or earlier if a redemption event occurs (such as non-payment of annual interest payments). Subject to converting at least US$10,000,000 of Convertible Notes (Minimum Conversion Amount), LandOcean may elect to convert the Convertible Notes into Shares at a conversion price of £0.0088 per Share (Conversion Price) at any time prior to the Maturity Date.

Range also has the option of redeeming the Convertible Notes for cash at any time prior to the Maturity Date. Range must also pay yearly interest instalments, on each anniversary of the issue date of the Convertible Notes, in cash.

Further terms and conditions of the Convertible Notes are set out in Schedule 1.

(b)                Nominee Directors

Following issue of the Convertible Notes, for so long as:

(i)          the aggregate face value of the Convertible Notes held by LandOcean combined with the aggregate market value of any Shares issued on conversion of any Convertible Notes (which is to be based on the 30 day VWAP and converted into US$ at the applicable exchange rate) is greater than US$10,000,000, LandOcean may appoint one nominee as a Director; and

(ii)         the aggregate face value of the Convertible Notes held by LandOcean combined with the aggregate market value of any Shares issued on conversion of any Convertible Notes (which is to be based on the 30 day VWAP and converted into US$ at the applicable exchange rate) is equal to or greater than US$20,000,000, LandOcean may appoint an additional nominee as a Director.

If LandOcean ceases to satisfy the thresholds above, then it must procure that the relevant nominee Director resigns from the board of the Company.

At the date of this Notice, LandOcean has not sought to appoint nominee Directors, but it may exercise this right in the future.

The election or re-election of these nominee directors (as relevant) will be subject to the provisions of the Company's Constitution and other applicable law (including approval of the Company's nominated adviser for the purpose of its AIM listing).

1.5           Subscription Agreement

The material terms of the Subscription Agreement are as follows:

(a)                Variations to the Convertible Note Agreement

 

With effect from the date of the Subscription Agreement, the interest payment date for the interest due and payable under the Convertible Note Agreement for the 12 month period to 28 November 2018, being US$1,600,000, is deferred until the earlier of the date the Subscription Agreement is terminated and the date on which the condition precedent is satisfied (Completion Date).

The issue of Shares to LandOcean under the Subscription Agreement will be in full and final satisfaction of the Company's obligation to pay the Accrued Interest to LandOcean under the Convertible Note Agreement.

(b)                Condition precedent

 

Completion of the issue of Shares under the Subscription Agreement is conditional on and does not become binding unless and until Shareholders have approved the issue of Shares to LandOcean.

 

If Shareholder approval is not obtained prior to 15 March 2019 (Cut Off Date), or the Subscription Agreement is terminated, the Company must pay the Accrued Interest to LandOcean in immediately available funds on the Cut Off Date.

 

(c)                Subscription and issue

The number of Shares to be issued to LandOcean on the Completion Date will be calculated as follows:

 

 

Accrued Interest (converted into Australian dollars at the Exchange Rate) / Subscription Price

Where:

Accrued Interest means the total amount of interest due and payable by the Company to LandOcean pursuant the Convertible Note Agreement on the Interest Payment Date (as defined in the Convertible Note Agreement) falling in the 2018 calendar year, being US$1,600,000.

Exchange Rate means at any time, the mid-rate which appears on the Bloomberg Screen "USDAUD" at or about 11:00am Sydney time on that day.

Subscription Price means the amount per Share equal to the average of the daily volume weighted average sale price of Shares traded on the ASX during the 90 Trading Days prior to the Completion Date without reference to the sale price of Shares sold in:

·             any transaction defined in the ASX Operating Rules as "special";

·             crossings prior to the commencement of normal trading;

·             crossings during the after hours adjust phase;

·             overnight trades; or

·             trades arising from the exercise of options in respect of Shares.

1.6           Effect of the transaction on the Company

(a)                Capital structure

Below is a table showing the Company's current capital structure and the possible capital structure on completion of the issue of Shares under the Subscription Agreement and also under the Convertible Note Agreement. This table assumes the Company does not issue any additional Shares and no Options expire, or are exercised, prior to the date that all of the Convertible Notes have converted.

 

Shares

Options1

Convertible Notes2

 

Balance at the date of this Notice

 

8,504,921,692

 

437,643,136

 

20,000,000

 

Balance following issue of Shares in satisfaction of Accrued Interest under the Subscription Agreement (rounded up)

 

10,746,979,9013,6

 

437,643,136

 

20,000,000

 

Balance following issue of Shares on conversion of the Convertible Notes under the Convertible Note Agreement (rounded up)

 

12,616,152,7554,5,6

 

437,643,136

 

Nil

 

Notes:

1.      Comprising 194,585,862 unlisted Options exercisable at £0.01 on or before 3 September 2019, 172,557,274 unlisted Options exercisable at £0.02 on or before 3 September 2019 and 70,500,000 unlisted Options exercisable at £0.01 on or before 30 March 2020.

 

2.       Issued on 28 November 2016 conditional on shareholder approval, which was obtained on 7 February 2017.  The terms and conditions are summarised in Schedule 1.

 

3.       This number assumes a Subscription Price of A$0.001 (being the closing price of Shares on ASX since 9 October 2018) and an AUD/USD exchange rate of 0.7136 as at 24 January 2019.  Based on its definition, the Subscription Price cannot be lower than A$0.001.

 

4.      This number assumes a Conversion Price of £0.0088 and an GBP/USD exchange rate of 1.216 as at 27 October 2016 (being the Business Day prior to date the Company entered into the Convertible Note Agreement). For details of other scenarios possible as a result of an alternate Conversion Price and the effect this would have on the capital structure of the Company refer to Schedule 2.

 

5.        Assumes all of the Convertible Notes are converted to Shares prior to the expiry date of the Convertible Notes.

 

6.     The Company may issue a differing number of Shares, but has included this disclosure as a theoretical number of Shares LandOcean may be issued in such circumstances. For details of other scenarios possible as a result of an alternate Subscription Price or Conversion Price after applicable foreign currency conversion (as the context requires) and the effect this would have on the capital structure of the Company refer to Schedule 2.

 

 

(b)                Voting power of LandOcean and its Associates

 

Under the Subscription Agreement, LandOcean has agreed to receive Shares in full and final satisfaction of the Company's obligation to pay the Accrued Interest to LandOcean pursuant to the Convertible Note Agreement.

The Convertible Notes were issued on 28 November 2016. Subject to converting the Minimum Conversion Amount, LandOcean may elect to convert the Convertible Notes into Shares at the Conversion Price at any time prior to the Maturity Date.

Neither LandOcean, nor any of its Associates, currently hold any Shares in the Company.

Refer to Schedule 2 for full particulars (including the number and percentage) of Shares in which LandOcean has, or will have, a relevant interest in immediately before and after the issue of Shares to LandOcean under the Subscription Agreement, as well after conversion of the Convertible Notes (assuming all of the Convertible Notes are converted into Shares).

(c)                Increase or decrease in voting power

The voting power of LandOcean and its Associates in the Company may change as follows:

(i)                 Increase in voting power:

A.         Transaction of Shares by LandOcean or its Associates on and off market. LandOcean and its Associates could increase its Shareholding under item 9 of section 611 of the Corporations Act allowing it to acquire 3% every 6 months.
B.         Cancellation of Shares held by Shareholders other than LandOcean and its Associates.
 

 

(ii)               Decrease in voting power:

A.              Disposal of Shares held by LandOcean or its Associates.
B.         Issue of Shares by the Company to Shareholders other than LandOcean and its Associates.
C.          Conversion of a proportion of Convertible Notes rather than all of the Convertible Notes.
D.             Exercise of Options by Option holders.

The Corporations Act and ASIC Regulatory Guide 74 set out a number of regulatory requirements which must be satisfied. These are summarised below.

1.7           Conversion variables

Shareholders should note that given the variables required to determine the Accrued Interest (converted into Australian dollars) and the Subscription Price pursuant to the Subscription Agreement, and the Conversion Price (converted into US dollars) pursuant to the Convertible Note Agreement, it is not possible to provide an exact number of Shares to be issued, or the total increase in the relevant interest of LandOcean (or its Associates), under the Subscription Agreement or on conversion of the Convertible Notes.

 

The Accrued Interest will be subject to the AUD/USD exchange on the Completion Date and the Subscription Price will be based on the average of the daily volume weighted average sale price of Shares traded on the ASX during the 90 Trading Days prior to the Completion Date.  Further, the Conversion Price under the Convertible Note Agreement will be subject to the GBP/USD exchange rate at the time of conversion. The Company does not expect this will have a material effect on the number of Shares to be issued to LandOcean under the Subscription Agreement and on conversion of the Convertible Notes.

 

For details of other scenarios possible as a result of an alternate Subscription Price or Conversion Price after applicable foreign currency conversion and the effect this would have on the capital structure of the Company refer to Schedule 2.

1.8           Relevant interest may not be obtained

Although the Accrued Interest will convert in full on the day of Shareholder approval of Resolution 1, Shareholders should note that the Convertible Notes may be redeemed in full or in part at the election of LandOcean (subject to the minimum conversion threshold). That is, they may not all be converted. The material terms and conditions of the Convertible Notes, including the terms that govern redemption, repayment and conversion, are set out in Schedule 1.

 

Redemption of the Convertible Notes (rather than conversion) would result in LandOcean or its Associates being repaid the relevant amount in cash rather than Shares. The effect of this would be that LandOcean or its Associates may acquire less Shares (and a smaller relevant interest) than the approval Resolution 1 permits.

1.9           Item 7 of section 611 of the Corporations Act

(a)                Section 606 of the Corporations Act prohibits a person acquiring a relevant interest in the issued voting shares of the Company if, because of the transaction, that person's or another person's voting power in the Company increases from:

 

(i)                 20% or below to more than 20%; or

(ii)               a starting point that is above 20% and below 90%.

(b)                The voting power of a person in the Company is determined by reference to section 610 of the Corporations Act. A person's voting power in the Company is the total of the votes attaching to the Shares in the Company in which that person and that person's associates (within the meaning of the Corporations Act) have a relevant interest.

 

(c)                Under section 608 of the Corporations Act, a person will have a relevant interest in Shares if:

(i)                 the person is the registered holder of the Shares;

(ii)               the person has the power to exercise or control the exercise of votes or disposal of the Shares; or

(iii)              the person has over 20% of the voting power in a company that has a relevant interest in Shares, then the person has a relevant interest in said Shares.

(d)                For the purpose of determining who is an associate you need to consider section 12 of the Corporations Act. Any reference in chapters 6 to 6C of the Corporations Act to an associate is as that term is defined in section 12 of the Corporations Act. The definition of 'associate' in section 12 of the Corporations Act is exclusive. If a person is an associate under section 11, 13 or 15 of the Corporations Act then it does not apply to chapters 6 to 6C of the Corporations Act. A person is only an associate for the purpose of chapters 6 to 6C of the Corporations Act if he is an associate under section 12 of the Corporations Act.

 

(e)                A person (second person) will be an associate of the other person (first person) if:

(i)                 the first person is a body corporate and the second person is:

A.                  A body corporate the first person controls;
B.                  A body corporate that controls the first person: or
C.                  A body corporate that is controlled by an entity that controls the first person;

(ii)               the second person has entered, or proposes to enter, into a relevant agreement with the first person for the purpose of controlling or influencing the composition of the board of a body corporate or the conduct of the affairs of a body corporate; or

(iii)              the second person is a person with whom the first person is acting, or proposes to act, in concert in relation to the affairs of a body corporate.

(f)                 The Corporations Act defines 'control' and 'relevant agreement' very broadly as follows:

(i)                 Under section 50AA of the Corporations Act control means the capacity to determine the outcome of decisions about the financial and operating policies of the Company. In determining the capacity you need to take into account the practical influence a person can exert and any practice or pattern of behaviour affecting the financial or operating policies of the Company.

(ii)               Under section 9 of the Corporations Act relevant agreement means an agreement, arrangement or understanding:

(iii)              whether formal or informal or partly formal and partly informal;

A.          whether written or oral or partly written and partly oral; and
B.         whether or not having legal or equitable force and whether or not based on legal or equitable rights.

(g)                Associates are determined as a matter of fact. For example, where a person controls or influences the Board or the conduct of the Company's business affairs or acts in concert with a person in relation to the entity's business affairs.

 

(h)                Section 611 of the Corporations Act has exceptions to the prohibition in section 606 of the Corporations Act (Prohibition). Item 7 of section 611 of the Corporations Act provides a mechanism by which Shareholders may approve an issue of Shares to a person which results in that person's or another person's voting power in the Company increasing from:

(i)                 20% or below to more than 20%; or

(ii)               a starting point that is above 20% and below 90%.

1.10         Reason approval under item 7 of section 611 of the Corporations Act is required

As set out above, item 7 of section 611 of the Corporations Act provides an exception to the Prohibition, whereby a person may acquire a relevant interest in a company's voting shares with shareholder approval.

Resolution 1 seeks Shareholder approval, for the purpose of item 7 of section 611 of the Corporations Act, to allow the Company to issue Shares to LandOcean in accordance with the Subscription Agreement and the acquisition by LandOcean and its Associates of a relevant interest in the issued voting shares of the Company resulting from the issue of Shares in accordance with the Subscription Agreement and on the conversion of Convertible Notes held by LandOcean, which is otherwise prohibited by section 606(1) of the Corporations Act, which may result in LandOcean's and its Associates voting power in the Company increasing to a maximum of 32.6%.  Refer to Schedule 2 for further details of the voting power calculations including variables and assumptions used.

1.11         Specific Information required by item 7 of section 611 of the Corporations Act and ASIC Regulatory Guide 74

The following information is required to be provided to Shareholders under the Corporations Act and ASIC Regulatory Guide 74 in respect of obtaining approval for item 7 of section 611 of the Corporations Act.  Shareholders are also referred to the Independent Expert's Report prepared by Moore Stephens Perth Corporate Services Pty Ltd annexed to this Explanatory Statement.

(a)                The identity of LandOcean, its Associates and any person who will have a relevant interest in the Shares to be allotted to LandOcean or its Associates

Details of LandOcean are set out in Section 1.3.

(b)                Full particulars (including the number and percentage) of the shares in the Company to which LandOcean and its Associates will be entitled immediately before and after Resolution 1

LandOcean, nor any of its Associates, will not hold any Shares in the Company prior to issue of Shares under the Subscription Agreement or on conversion of the Convertible Notes.

Refer to Schedule 2 for full particulars (including the number and percentage) of Shares in which LandOcean has, or will have, a relevant interest in immediately before and after the issue of Shares to LandOcean under the Subscription Agreement, as well after conversion of the Convertible Notes (assuming all of the Convertible Notes are converted into Shares).

(c)                The identity, associations (with the Company, LandOcean or any of their Associates) and qualifications of any person who is intended to become a director if Shareholders agree to Resolution 1

Subject to the thresholds set out in Section 1.4(b), LandOcean may nominate up to two persons to be appointed as non-executive directors of the Company.

At the date of this Notice, LandOcean has advised the Company that it does not wish to appoint nominee directors, but may exercise this right in the future. The election or re-election of these nominee directors (as relevant) will be subject to the provisions of the Company's Constitution and other applicable law.

(d)                LandOcean's intentions regarding the future of the Company if Shareholders agree to the transaction and the allotment of Shares to LandOcean and/or its Associates

Other than as disclosed elsewhere in this Explanatory Statement, the Company understands that LandOcean and its Associates:

(i)                 have no present intention to change the business of the Company;

(ii)               have no present intention to inject further capital into the Company (other than as disclosed in this Notice);

(iii)              have no present intention to change the future employment of the present employees of the Company;

(iv)         have no proposal whereby any property will be transferred between the Company and LandOcean or and its Associates; and

(v)                have no present intention to redeploy any fixed assets of the Company.

These intentions are based on information concerning the Company, its business, and the business environment which is known to LandOcean and its Associates at the date of this Notice.

These present intentions may change as new information becomes available, as circumstances change or in the light of all material information, facts and circumstances necessary to assess the operational, commercial, taxation and financial implications of those decisions at the relevant time.

(e)                Particulars of the terms of the proposed allotment of Shares and any contract or proposed contract between LandOcean and the Company or any of their Associates which is conditional upon, or directly or indirectly dependent on, Shareholders agreement to the allotment of Shares to LandOcean and its Associates pursuant to Resolution 1

The terms of the Subscription Agreement and Convertible Note Agreement governing the issue of Shares are summarised in Sections 1.4, 1.5 and Schedule 1 (as applicable).

Other than the Subscription Agreement, the Convertible Note Agreement and the IMSC Amending Deed, there are no contracts or proposed contracts between LandOcean and the Company or any of their Associates which are conditional upon, or directly or indirectly dependent on, Shareholder agreement to the issue of the Shares pursuant to Resolution 1.

(f)                 When the allotment of Shares under the Subscription is to be made

The Shares to be issued to LandOcean under the Subscription Agreement will be issued on the Completion Date.

The Convertible Notes have been issued to LandOcean pursuant to the Convertible Note Agreement. The right of LandOcean to convert the Convertible Notes into Shares is subject to approval by Shareholders. The conversion into Shares could happen at any time following approval by Shareholders until the Maturity Date of the Convertible Notes.

(g)                An explanation of the reasons for the proposed allotment of Shares and to LandOcean and its Associates

The issue of Shares to LandOcean under the Subscription Agreement will be in full and final satisfaction of the Company's obligation to pay the Accrued Interest to LandOcean under the Convertible Note Agreement.

The Convertible Notes were issued to LandOcean pursuant to the terms of the Convertible Note Agreement, and as consideration for LandOcean agreeing to waive its entitlement to US$20,000,000 of the Accrued Fees in accordance with the IMSC Amending Deed.

(h)                The interests of the Directors in Resolution 1

None of the Directors have an interest in Resolution 1.

(i)                 Identity of the Directors who approved or voted against the proposal to put Resolution 1 to Shareholders and the Explanatory Statement

All of the Directors voted in favour of the proposal to put the issue of Shares the subject of Resolution 1 the approval of Shareholders.

(j)                 Any intention of LandOcean to change significantly the financial or dividend policies of the Company

LandOcean does not intend to change significantly the financial or dividend policies of the Company at this time.

(k)                Recommendation or otherwise of each Director as to whether Shareholders should agree to the proposed allotment and the reasons for the recommendation or otherwise

See Section 1.15.

(l)                 An analysis of whether the proposed allotment of Shares pursuant to Resolution 1 is fair and reasonable when considered in the context of the interests of the Shareholders other than LandOcean and its Associates.

See Section 1.14.

1.12         Advantages

The Directors are of the view that the following non-exhaustive list of advantages may be relevant to a Shareholder's decision on how to vote in relation to Resolution 1:

(a)                it will allow the Company to preserve cash to be spent on its existing assets rather than interest payments to LandOcean.

1.13         Disadvantages

The Directors are of the view that the following non-exhaustive list of disadvantages may be relevant to a Shareholder's decision on how to vote in relation to Resolution 1:

(a)                Shareholders will have their voting power reduced. Consequently, the ability of existing Shareholders to influence decisions, including the composition of the Board or the acquisition or disposal of assets will be reduced accordingly;

 

(b)                LandOcean and its Associates will hold up to 20.9% of Range following the issue of Shares under the Subscription Agreement increasing to up to 32.6% on conversion of all Convertible Notes (subject to the assumptions set out in Schedule 2). Therefore, LandOcean and its Associates will be able to have a significant influence over ordinary resolutions.  In addition, LandOcean may have the ability to nominate up to two persons to be nominated as non-executive directors of the Company; and

 

(c)                the number of Shares to be issued to LandOcean is subject to exchange rate fluctuations and not known and therefore the level of potential dilution to Shareholders can only be approximated.

1.14         Independent Expert's Report

The Independent Expert's Report comments on the fairness and reasonableness of the transaction the subject of this Resolution to the non-associated Shareholders in the Company.

The Independent Expert's Report also contains an assessment of the advantages and disadvantages of the proposed issue of Shares to LandOcean. This assessment is designed to assist all Shareholders in reaching their voting decision.

The Independent Expert has provided the Independent Expert's Report and has provided an opinion that it believes the proposal as outlined in Resolution 1 is FAIR AND REASONABLE to the Shareholders not associated with LandOcean.  It is recommended that all Shareholders read the Independent Expert's Report in full.

The Independent Expert's Report is enclosed with this Notice of Meeting at Annexure 1.

1.15         Interests and Recommendations of Directors

None of the current Board members have a material personal interest in the outcome of Resolution 1 other than their interests arising solely in their capacity as Shareholders of the Company. Each of the Directors who holds Shares in the Company (or whose associated entities hold Shares) and is entitled to vote will vote their Shares in favour of Resolution 1.

All of the Directors are of the opinion that Resolution 1 is in the best interests of Shareholders and, accordingly, the Directors unanimously recommend that Shareholders vote in favour of Resolution.

The Director's recommendations are based on an assessment of the advantages and disadvantages referred to in Sections 1.12 and 1.13 respectively and being of the view that the advantages outweigh the disadvantages and the Independent Expert has determined the issue of Shares contemplated by Resolution 1 is FAIR AND REASONABLE to the non-associated Shareholders.

The Directors are not aware of any other information other than as set out in this Notice of Meeting that would be reasonably required by Shareholders to allow them to make a decision whether it is in the best interests of the Company to pass Resolution 1.

 

 

Glossary

£ means the official currency of the United Kingdom.

A$ means Australian dollars.

AIM means the market of that name operated by the London Stock Exchange.

AIM Rules means the AIM Rules for Companies published by the London Stock Exchange, as amended from time to time.

ASIC means the Australian Securities & Investments Commission.

Associate has the meaning in Section 1.9 and as otherwise defined in the Corporations Act.

ASX means ASX Limited (ACN 008 624 691) or the financial market operated by ASX Limited, as the context requires.

ASX Listing Rules means the Listing Rules of ASX.

Board means the current board of directors of the Company.

Business Day means Monday to Friday inclusive, except New Year's Day, Good Friday, Easter Monday, Christmas Day, Boxing Day, and any other day that ASX declares is not a business day.

Chair means the chair of the Meeting.

Company means Range Resources Limited (002 522 009).

Constitution means the Company's constitution.

Convertible Note means a convertible note with the terms and conditions set out in Section 1.4(a) and Schedule 1.

Corporations Act means the Corporations Act 2001 (Cth).

Directors means the current directors of the Company.

DI Holder means a holder of depositary interests representing Shares which are electronically listed for trading on AIM and issued by Computershare Investor Services plc which holds legal title to the underlying Shares.

Explanatory Statement means the explanatory statement accompanying the Notice.

General Meeting or Meeting means the meeting convened by the Notice.

GMT means Greenwich Mean Time.

 

Notice or Notice of Meeting means this notice of meeting including the Explanatory Statement and the Proxy Form.

Option means an option to acquire a Share.

Proxy Form means the proxy form accompanying the Notice.

Resolution means the resolution set out in the Notice.

Section means a section of the Explanatory Statement.

Share means a fully paid ordinary share in the capital of the Company.

Shareholder means a registered holder of a Share.

Trading Day means a day determined by ASX to be a trading day in accordance with the Listing Rules.

US$ means United States dollars.

VWAP means volume weighted average price.

WST means Western Standard Time as observed in Perth, Western Australia.

 

 

 

Schedule 1 - Terms and conditions of the Convertible Notes

The terms and conditions of the Convertible Notes are as follows:

Terms

Details

Subscription Amount

US$20,000,000

Face Value

US$1.00 per Convertible Note

Maturity Date

28 November 2019

Interest Rate

8% per annum

 

Default interest on any amount that is not paid when due will be at a rate of 10% per annum.

Interest

Interest will accrue daily and be payable annually in arrears.

Conversion Price

£0.0088.

 

To calculate the Conversion Price in US Dollars, the exchange rate will be the mid-rate which appears on the Bloomberg Screen on that date.

Conversion by LandOcean

Subject to converting the Minimum Conversion Amount, LandOcean may convert some or all of the Convertible Notes into Shares at the Conversion Price.

Redemption by the Company

At any time after the issue date, the Company may elect to redeem all or some of the Convertible Notes by payment of the amount outstanding in cash.

Redemption on Maturity Date

On the Maturity Date, the Company must redeem all of the outstanding Convertible Notes (being those which have not been previously redeemed or converted) by payment of the amount outstanding in cash.

Redemption by LandOcean

The Convertible Notes are subject to the following redemption events: (i) non-payment of funds within 40 business days of the due date, (ii) the winding up or insolvency of the Company or the Company (or one of its subsidiaries), or (iii) ceasing or threatening to cease to carry on its business which is likely to adversely affect the Company as a whole.

 

LandOcean may require the Company to redeem some or all of the Convertible Notes following the occurrence of any of these events.

No Voting Rights

The Convertible Notes do not carry any voting rights but LandOcean will have the same rights as a holder of Shares to receive notices of general meetings, reports, financial statements or any other communications issued by the Company.

Adjustment Event

If there is any reconstruction of the issued share capital of the Company before conversion of the Convertible Notes, the rights of LandOcean may be varied to comply with the Listing Rules which apply to the reconstruction at the time of the reconstruction.

Security

Nil

Governing Law

Western Australia

 

 

 

Schedule 2 - Effect on capital structure and voting power of LandOcean and Associates

Shareholders should note that given the variables required to determine the Accrued Interest (converted into Australian dollars) and the Subscription Price pursuant to the Subscription Agreement, and the Conversion Price (converted into US dollars) pursuant to the Convertible Note Agreement, it is not possible to provide an exact number of Shares to be issued, or the total increase in the relevant interest of LandOcean (or its Associates), under the Subscription Agreement or on conversion of the Convertible Notes.

 

The Accrued Interest will be subject to the AUD/USD exchange on the Completion Date and the Subscription Price will be based on the average of the daily volume weighted average sale price of Shares traded on the ASX during the 90 Trading Days prior to the Completion Date. Further, the Conversion Price under the Convertible Note Agreement will be subject to the GBP/USD exchange rate at the time of conversion. The Company does not expect this will have a material effect on the number of Shares to be issued to LandOcean under the Subscription Agreement and on conversion of the Convertible Notes. 

The table below is a worked example of the number of Shares that may be issued on conversion of the Convertible Notes based on various exchange rates at the time of issue.

 

Scenario 1

Scenario 2

Exchange rate

GBP = US$1.216

(at 27 October 2016)

GBP = US$1.3012

(as at 24 January 2019)

Conversion Price (in US$)

US$0.0107

US$0.0115

Shares issued on conversion of the Convertible Notes

1,869,172,854

1,746,639,466

 

The table below is a worked example of the number of Shares that may be issued to LandOcean under the Subscription Agreement (assuming a Subscription Price of A$0.001 under Scenario 1 and A$0.0013 under Scenario 2) at the Completion Date.

 

Scenario 1

Scenario 2

Exchange rate 

A$ = US$0.7136

(at 24 January 2019)

A$ = US$0.7136

(at 24 January 2019)

Accrued Interest (in A$)

A$2,242,058

A$2,242,058

Subscription Price

A$0.001

A$0.0013

Shares issued in satisfaction of Accrued Interest

2,242,058,209

1,724,660,161

 

Note: The last trading price of the Shares on ASX as at 24 January 2019 was A$0.001. As Shares cannot trade on ASX at a lower price the Subscription Price cannot be lower than A$0.001. If the Subscription Price is higher than A$0.001 then the maximum number of Shares to be issued under the Subscription Agreement (and in turn Resolution 1) will be less and, accordingly, the voting power of LandOcean and its Associates will also be less.

 

 

The proposed capital structure of the Company on completion of the issue of Shares under the Subscription Agreement and upon conversion of the Convertible Notes is set out below.

 

Scenario 1

Scenario 2

Total Shares on issue at the date of this Notice

8,504,921,692

8,504,921,692

Increase in the number of Shares on issue following issue of Shares in satisfaction of Accrued Interest

2,242,058,209

1,724,660,161

Total Shares

10,746,979,901

10,229,581,853

Percentage of share capital held by LandOcean or its Associates

20.9%

16.9%

Increase in the number of Shares on issue following issue of Shares on conversion of the Convertible Notes

1,869,172,854

1,746,639,466

Total Shares

12,616,152,755

11,976,221,319

Percentage of share capital held by LandOcean or its Associates

32.6%

29.0%

 

The table above uses the following assumptions:

1.   All of the Convertible Notes are converted to Shares on or before the Maturity Date

2.   The Company does not issue any additional Shares and no Options expire, or are exercised, prior to the date that all of the Convertible Notes have converted.

3.   LandOcean and its Associates do not acquire a relevant interest in any other Shares other than under Resolution 1.

 

 

 

 


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