Seaenergy : Trading and Working Capital Funding Update

SeaEnergy PLC

('SeaEnergy', the 'Company' or the 'Group')

Trading and Working Capital Funding Update

SeaEnergy, the innovation-led offshore energy services business, is pleased to announce that it has agreed a working capital funding package under which it can draw up to £1.0 million over the next 12 months.

During 2015, sustained low oil prices have very severely impacted levels of business in the core R2S offering as well as in other parts of the Group. Revenue from continuing business for the year ending 31 December 2015 is now expected to be between £2.6 and £2.8 million, resulting in a significant loss. While software licence income has held up well and forensic activities are ahead of forecast, the weakness in the oil price and consequent reduction in oil company operating budgets have severely impacted new capture and recapture activities and levels of digital media work.

In addition, SeaEnergy has now handed over operational responsibility for the ships previously under management and expects to have completed its exit from ship management by the end of the year.

The Directors of SeaEnergy anticipate a recovery in the core R2S business into 2016, as offshore field operators' activity levels pick up, and efforts to grow the business through internationalisation and diversification start to bear fruit. In the UK, the Group has recently won a number of R2S capture projects with total value of around £150,000 and the Directors have been pleased that R2S licence renewals have continued despite the operational downturn. This further demonstrates the value of the R2S software/service in driving down overall supply chain costs. The Group will make further announcements on new work in due course.

The Board has reviewed a number of options to address a shortfall in working capital resulting from the reduced R2S business levels. The options included an equity fundraising, but the Board has opted for a short term debt-based approach in order to minimise long term dilution to shareholders.

On 24 November 2015, the Company signed loan agreements with Davies Newman Property Limited, a Scottish-based company with interests in property and oil & gas, and LC Capital Master Fund, Ltd (together the 'Lenders') (the 'Agreement(s)').

Under the Agreements, each of the Lenders will provide a secured facility of £500,000 to the Company (the 'Facilities') on the same terms.

The Facilities will each be repayable on 30 April 2017 and accrue interest at 10% per annum, payable semi-annually. In the event of default, an interest rate of 18% will apply to the outstanding balance and the facility will become repayable immediately. In addition the Lenders will each receive warrants to subscribe for up to 2,500,000 new ordinary shares in the Company at an exercise price of 10p per share exercisable at any time within five years of the date of grant (the 'Warrants').

LC Capital Master Fund, Ltd, a US-based hedge fund which holds a 7% interest in the share capital of the Company is controlled by Steven Lampe, a non-executive director of SeaEnergy, and is therefore a related party of the Company under Rule 13 of the AIM Rules for Companies. Davies Newman Property Limited is not a related party of either the Company or LC Capital Master Fund.

The Directors of SeaEnergy (excluding Steven Lampe) consider, having consulted with WH Ireland Limited, the Company's nominated adviser, that the terms of the Agreement with LC Capital Master Fund, Ltd and the terms of grant of the Warrants to LC Capital Master Fund, Ltd are fair and reasonable insofar as the Company's shareholders are concerned.

The Directors believe that, in light of the currently anticipated upturn in R2S business and other work in 2016, together with significant cost reductions in central costs (including an extension through 2016 of the voluntary salary waivers by the Directors which began in June 2015), the Facilities, in addition to the existing HSBC overdraft facility, should be sufficient for the Group's working capital requirements for the foreseeable future.

ENDS