Empyrean Energy : Proposed Return of Value to Shareholders & Notice of General Meeting

Regulatory Story

Proposed Return of Value to Shareholders

RNS Number : 5582L Empyrean Energy PLC 03 October 2016

Empyrean Energy PLC / Index: AIM / Epic: EME / Sector: Oil & Gas 3 October 2016

This announcement contains inside informa昀위on

Empyrean Energy PLC ("Empyrean" or the "Company") today announces that it proposes to return 7.9 pence to Shareholders in respect of each Ordinary Share held. Details of the Return of Value will be set out in the circular to Shareholders which is expected to be despatched to Shareholders later today ("Circular").

The Return of Value involves the crea昀위on and capitalisa昀위on of B Shares from monies standing to the credit of the Company's share premium account and the Reduc昀위on of Capital by a court process.

To effect the Return of Value:

• Shareholders will be issued with one B Share for each Ordinary Share held by them at 5.00p.m. on 19 October 2016.

• On 9 November 2016, a Court hearing is scheduled to confirm the Return of Value. Subject to such confirma昀위on, the B Shares will be cancelled pursuant to the Reduc昀위on of Capital

and holders of the B Shares will be paid the capital paid up on the B Shares (being 7.9 pence per B Share).

• Payments in respect of the Return of Value are expected to be made during the week beginning 14 November 2016.

A copy of the Circular containing more informa昀위on in rela昀위on to the Return of Value and Reduc昀위on of Capital and the No昀위ce of General Mee昀위ng will be available on the Company's website at www.empyreanenergy.com.

Terms used in this announcement but which are otherwise undefined shall have the same meanings as set out in the Circular. This announcement and the summary of the Proposed Return of Value should be read in conjunc昀위on with the Circular.

DETAILS OF RETURN OF VALUE

1. Introduc昀위on

   On 22 February 2016, the Company announced the comple昀위on of the sale of the Sugarloaf AMI Project for a total purchase price of US$66.315 million, as adjusted. The Company received net cash proceeds of approximately US$17.693 million (including the deposit of US$6.150 million) a鼀er applying the proceeds to (i) repay the Company's exis昀위ng debt facility with Macquarie Bank, (ii) se쇿㤂le payments due to Marathon Oil Company for outstanding expenses, (iii) make agreed payments under the terms of the PSA to the Withholding Tax Escrow Account and (iv) se쇿㤂le the US based advisory and legal expenses of the Sale.

   The Company announced on 17 August 2016 that it received an amount of US$9.724 million, which comprises the sum of US$10.725 million, (being 15 per cent. of an an昀위cipated maximum considera昀위on of US$71.5 million under the terms of the PSA) reduced for the current year of tax by US$1.001 million which has been remi쇿㤂ed to the IRS in the US.

   As further announced on 22 August 2016, the Company received the first tranche of funds held in escrow to secure the representa昀위on, warranty and indemnity obliga昀위ons under the PSA, namely, the sum of US$2.519 million.

   The Board is now pleased to confirm that it proposes to return approximately

   £17,524,874.39 in aggregate to Shareholders from the net proceeds of the Sale. This return of cash is proposed to be completed as follows:

   • 7.9 pence per Ordinary Share held at the Record Time to be returned to Shareholders through the issue of a new class of B Shares which the Company will cancel pursuant to the Reduc昀위on of Capital and holders will be en昀위tled to receive the Capital Repayment of 7.9 pence per B Share held so cancelled.

2. The B Share Scheme

   Under the terms of the B Share Scheme, Shareholders will receive one B Share for each corresponding Ordinary Share held at the Record Time. It is expected that the B Shares will be cancelled pursuant to the Reduc昀위on of Capital on 9 November 2016 and that the Capital Repayment will be made in respect of each cancelled B Share. Subject to the Reduc昀위on of Capital, this will occur during the week beginning 14 November 2016.

   This structure should generally result in the majority of UK tax payers receiving their cash proceeds on cancella昀위on of the B Shares as capital for taxa昀위on purposes. Shareholders should read Part V of the Circular which sets out a general summary guide to certain poten昀위al tax consequences in the UK. If Shareholders are subject to taxa昀위on in a jurisdic昀위on other than the UK, are non‐UK domiciled or are in any doubt as to your tax posi昀위on, you should consult an appropriate independent professional adviser.

   Shareholders should read Part III of the Circular which sets out further details of the B Share Scheme and Part IV of the Circular which sets out the rights and restric昀위ons a쇿㤂ached to the B Shares.

3. Recommenda昀위on and inten昀위ons of the Directors

The Directors believe that the passing of the Resolu昀위ons is most likely to promote the success of the Company for the benefit of its members as a whole. Accordingly, the Directors unanimously recommend that Shareholders vote in favour of the Resolu昀위ons, as they intend to do in respect of their aggregate beneficial holdings of 24,654,896 Ordinary Shares, represen昀위ng approximately 11.11 per cent of the Ordinary Shares in issue.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS FOR RETURN OF VALUE

2016

Date of the Circular 3 October

General Mee昀위ng 8.30 a.m. on 19 October

Announcement of result of General Mee昀위ng 19 October Record Time for en昀위tlements to B Shares 5.00 p.m. on 19 October An昀위cipated date of allotment and issue of B Shares 20 October

Ordinary Shares commence trading ex‐dividend 20 October

Court hearing in respect of direc昀위ons 27 October

Court hearing to confirm Return of Value 9 November

Effec昀위ve Date for Return of Value 9 November

Credit CREST accounts or despatch cheques in respect of the Capital Repayment on the B Shares

Week beginning 14 November

Notes:

1. References to 昀위mes in this announcement are to London 昀위me, England (unless otherwise stated).

2. The 昀위ming of the events in the above 昀위metable and in the rest of this announcement is indica昀위ve only and may be subject to change. In par昀위cular, certain of the events in the above 昀위metable are condi昀위onal upon, amongst other things, the approval of the Capital Resolu昀위on to be proposed at the General Mee昀위ng and the confirma昀위on of the Reduc昀위on of Capital by the Court.

3. If any of the above 昀위mes or dates should change, the revised 昀위mes and/or dates will be no昀위fied by an announcement to an RIS.

DEFINITIONS

"B Shares" the B Shares of 7.9 pence each in the capital of the Company carrying the rights and restric昀위ons summarised in Part IV of the Circular

"B Share Scheme" the return of 7.9 pence per Ordinary Share pursuant to the allotment, issue and cancella昀위on of the B Shares

"cer昀위ficated form" an ordinary share recorded on a Company's share register as being held in cer昀위ficated form (namely, not in CREST)

"Company" or "Empyrean"

Empyrean Energy PLC, incorporated in England and Wales with registered number 5387837

"Court" the High Court of Jus昀위ce in England and Wales

"Court Order" the order of the Court confirming the Reduc昀위on of Capital

"CREST" the relevant system (as defined in the CREST Regula昀위ons) in respect of which Euroclear is the operator (as defined in the CREST Regula昀위ons)

"CREST Regula昀위ons" the Uncer昀위ficated Securi昀위es Regula昀위ons 2001 (SI 2001/3755) (as amended)