Path Investments plc share price, company news, analysis and interviews

Path Investments plc (LON:PATH) is focused on the natural resources sector on a global basis. Path Investments plc seeks to create value for its shareholders through acquisitions, joint ventures or direct interests in natural resources businesses or associated projects.

Path Investments plc

The Company’s strategy is to seek to acquire energy and natural resources assets which are capable of both producing a near-term income as well as offering a development upside. The Company targets long-life assets with corresponding cash-flows and with limited execution risk. The Company aims to be in a position to offer a sustainable dividend yield, as well as seeking capital growth for shareholders.

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Path Investments

Path Investments conditions for acquisition of DG Innovate have been satisfied

Path Investments plc (LON: PATH), has now confirmed that, following the passing of all resolutions at its General Meeting (“GM”) held on 1 April 2022, that all other conditions precedent in respect of the acquisition of DG Innovate Limited have been satisfied or waived, apart from the admission to the Standard Listing segment of the Official List and trading on the Main Market of the London Stock Exchange. Admission is expected to occur at 8am on 8 April 2022 at which time the Acquisition will complete.

The Company has made an application for the Admission of, in aggregate, 6,813,251,305 New Ordinary Shares being 5,397,451,305 Initial Consideration Shares, 830,800,000 Warrant Shares, 510,000,000 Subscription Shares and 75,000,000 Fee Shares and for the readmission of the Company’s Existing Ordinary Shares.

Total Voting Rights

The total number of Ordinary Shares on Admission will be 8,842,715,107 and the total number of voting rights in the Company will be 8,842,715,107 which is the number that may be used by the shareholders as the denominator for calculations by which they will determine if they are required to notify their interest in, or a change to their interests in, Path Investments under the FCA’s Disclosure and Transparency Rules.

Capitalised terms not otherwise defined in this announcement have the same meaning as ascribed to them in the Prospectus dated 14 March 2022.

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Path Investments to host live online investor presentation on Thursday 7 April

Path Investments plc (LON:PATH) has announced that Christopher Theis (CEO) and Jack Allardyce (Finance Director), will provide a live online investor presentation on Thursday 7 April 2022 at 5.30pm London time in relation to the Company’s acquisition of DG Innovate Limited.

The presentation is open to all existing and potential shareholders.  Those wishing to attend should register via the following link where they will be provided with log in details:

https://us02web.zoom.us/webinar/register/WN_ofg8N0d9Rh-bFdZ40BmGXw

There will be the opportunity for participants to ask questions at the end of the presentation.  Questions can also be emailed to tim.metcalfe@investor-focus.co.uk ahead of the presentation.

Path Investments’ strategy is to seek to acquire energy and natural resources assets which are capable of both producing a near-term income as well as offering a development upside.

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Path Investments plc

Path Investments to change name to DG Innovate and £4.6 million fundraise

Path Investments plc (LON:PATH), has announced the publication of a prospectus in relation to the Company’s proposed acquisition of DG Innovate Ltd which contains a notice of General Meeting. This follows the Company’s announcements on 13 August 2021, 31 December 2021 and 1 February 2022 that it had entered into a conditional sale and purchase agreement to acquire the entire issued share capital of DG Innovate.

Highlights

·    As previously announced the Company has conditionally agreed to acquire DG Innovate. The initial consideration of £32.4 million is to be satisfied by the issue to the DG Innovate Shareholders of 5,397,451,305 Path Ordinary Shares (“Initial Consideration Shares”) at a deemed issue price of 0.6 pence per Ordinary Share. Further conditional deferred consideration of up to £5.4 million, to be satisfied by the issue of up to 895,610,844 Path Shares (“Deferred Consideration Shares”) on the first anniversary of completion, will become payable should DG Innovate sign one or more supply agreements for the provision of their motor technology with certain defined customers prior to this date with a combined potential value of £5 million or more.

·     The Acquisition is conditional, inter alia, on shareholder approval of the proposals and upon the Company’s Ordinary Shares being re-admitted to the Standard Listing segment of the Official List and trading on the Main Market of the London Stock Exchange. A general meeting to obtain Path shareholder approval is to be held at 2:00 p.m. on 1 April 2022.

·  DG Innovate is an advanced research and development company pioneering sustainable and environmentally considerate improvements to electric mobility and storage, using abundant materials and the best engineering and scientific practices. DG Innovate is currently developing its products alongside a number of major manufacturers across the transportation and energy sectors, research institutions and the UK Government, and has filed 18 patents worldwide.  DG Innovate’s current research and development activities are broadly split into two areas, focusing on novel electric motor technologies and energy storage solutions. Its two main products are:

o  Enhanced Drive Technology (EDT) – High efficiency, lightweight, cost-effective electric motors and electronics; and

o  Enhanced Battery Technology (EBT) – Sodium-ion batteries offering a sustainable energy storage solution at similar/greater energy density to incumbent technologies at a lower cost, increased safety with lower environmental footprint.

·      The Company has conditionally raised £2,550,000 through the issue of 510,000,000 Subscription Shares at 0.5p per Ordinary Share. Further, the Company has received irrevocable exercise notices, conditional on Admission, in respect of 830,800,000 Warrants (0.25p) raising an additional £2,077,000.

·      It is proposed that the Company’s name be changed to DG Innovate plc.

·    The proposed appointment of Martin Boughtwood as CTO and Patrick Symonds, Sir Stephen Dalton, Andrew Boughtwood and Trevor Gabriel as non-executive directors of the Company and the proposed retirement of Brent Fitzpatrick.

·     If the proposals are approved at the General Meeting, it is expected that Admission and dealings in the Company’s Ordinary Shares will commence on the London Stock Exchange on or around 8.00 a.m. on 8 April 2022.

Commenting, Christopher Theis, CEO of Path Investments, said:

“We are delighted to have completed the required prospectus in relation to our proposed acquisition of DG Innovate and to now be seeking formal shareholder approval for the Acquisition. We believe that the acquisition of DG Innovate presents a compelling value opportunity for the Company with DG Innovate having a strong technology and IP portfolio, targeted at current market technology’s shortcomings, coupled with significant commercial relationships, high calibre technical staff and near-term commercialisation opportunities.

“We have assembled a strong board to guide the new DG Innovate plc and we look forward to shareholders having the opportunity to formally approve the proposals at the General Meeting later this month.  I would also like to take this opportunity to thank Brent Fitzpatrick, who is proposing to step down as Chairman at Admission, for his wise counsel, support and dedication over a long period as we sought to conclude an appropriate transaction that we believe can deliver significant value for shareholders.”

Capitalised terms in this announcement shall have the same meaning as in the Prospectus.

Background

The Company announced on 12 August 2021 that it had conditionally agreed to acquire the entire issued share capital of DG Innovate. The initial consideration, is £32,384,707, to be satisfied by the issue to the DG Innovate Shareholders of the Initial Consideration Shares at a deemed issue price of 0.6 pence per Ordinary Share.

The terms of the SPA were varied on 1 February 2022 and it was agreed that further consideration of £5,373,665 would be payable to the Sellers, to be satisfied by the issue of the Deferred Consideration Shares, subject to the achievement by DG Innovate of the Deferred Consideration Targets during the first year following Completion. The Deferred Consideration Targets require the obtention within 12 months following completion by the DG Innovate Group of one or more profit generating supply contract(s) with a combined value of £5,000,000 or more, or (as may be agreed in writing between the Company and the Sellers’ Representative) with a combined potential value of £5,000,000 or more.

The Acquisition constitutes a Reverse Takeover under the Listing Rules as it will result in a fundamental change in the business and management of the Company. Trading in the Existing Ordinary Shares was suspended with effect from 12 August 2021 on announcement of the potential reverse takeover and pending the publication of a prospectus and completion of the Acquisition. The Acquisition is conditional, inter alia, upon Admission and the approval by Existing Shareholders of certain Resolutions at the Company’s General Meeting to be held on 1 April 2022.

The Prospectus explains the background to and reasons for the Acquisition, how it aligns with the Company’s strategy and why the Existing Directors believe that the Acquisition and the Subscription are in the best interests of the Company and its Existing Shareholders.

The proposals are conditional, inter alia, on the passing of the Resolutions by Shareholders at the General Meeting and Admission. If the proposals are approved, it is expected that Admission will become effective and dealings in the Path Ordinary Shares will commence on the London Stock Exchange on or around 8.00 a.m. on 8 April 2022.

Background on DG Innovate

DG Innovate (formerly Deregallera Holdings Ltd) is an advanced research and development company pioneering sustainable and environmentally considerate improvements to electric mobility and storage, using abundant materials and the best engineering and scientific practices. DG Innovate is currently developing its products alongside a number of major manufacturers across the transportation and energy sectors, research institutions and the UK Government and has filed 18 patents worldwide.

DG Innovate’s current research and development activities are broadly split into two areas, focusing on novel electric motor technologies and energy storage solutions. Its two main products are:

•   Enhanced Drive Technology (EDT) – High efficiency, lightweight, cost-effective electric motors and electronics; and

•   Enhanced Battery Technology (EBT) – Sodium-ion batteries offering a sustainable energy storage solution at similar/greater energy density to incumbent technologies at a lower cost, increased safety with lower environmental footprint

DG Innovate was founded in 2009 by Martin Boughtwood with a vision of delivering sustainable and environmentally considerate improvements to electric mobility and storage, using abundant materials and the best engineering and scientific practices. Specifically, DG Innovate has sought to address the major problems facing both electric mobility and energy storage. For the former, the key barrier to market penetration to date has been the effective real-world range of electric vehicles. DG Innovate has therefore focused on developing electric drive systems which aim to deliver improved range over existing technology, based on the same battery capacity, by reducing losses and improving efficiency. DG Innovate has a long-standing working relationship with the UK Government and is also collaborating with a global Tier 1 supplier to the commercial vehicle market.

In its energy storage development, which commenced in 2013, DG Innovate has focused on developing anode active materials as a key enabling technology for sodium-ion batteries. DG Innovate is in collaboration or commercial contact with several companies throughout the supply chain with the view towards volume commercialisation in the medium term.

DG Innovate has developed a significant intellectual property portfolio since its foundation, including a novel electric motor and corresponding architecture and a suite of energy storage materials (including sodium-ion cells and supercapacitors). It has been granted 11 patents during this time, with a further seven pending and a number of drafts under consideration.

To date DG Innovate has received approximately £18.6 million in funding through a mixture of equity from private funders, debt, grants and research funding from the UK Government, the Welsh Development Agency and through highly competitive grant awards under the Innovate UK Faraday Challenge. Additionally, Path has provided secured loan facilities to DG Innovate of which £900,000 has been drawn. As at the Last Practicable Date DG Innovate has £150,000 remaining available under the facilities.

Fundraising and use of proceeds

The Company is undertaking a Subscription to raise £2,550,000 by the issue of 510,000,000 Subscription Shares at 0.5p per Ordinary Share. The Company has entered into subscription agreements with the Subscribers which are conditional, inter alia, upon completion of the Acquisition and Admission. Further, the Company has received irrevocable exercise notices, conditional on Admission, in respect of 830,800,000 Warrants (0.25p) raising an additional £2,077,000.

The aggregate fundraise of approximately £4,627,000 will be used by the Enlarged Group to fund research and development costs, working capital for the Enlarged Group, transaction costs associated with the Acquisition and Admission, and to repay loans from certain DGI shareholders.

Proposed Board on Admission

The Company’s Existing Board consists of four Directors, Brent Fitzpatrick, Christopher Theis, John Allardyce and Nicholas Tulloch.  It is proposed that Mr Fitzpatrick will step down from the Board at Admission and it is proposed that Martin Boughtwood, Patrick Symonds, Sir Stephen Dalton, Andrew Boughtwood and Trevor Gabriel be appointed. The Board would like to thank Mr Fitzpatrick for his considerable efforts in his time with the Company.

Further details on the Directors are set out in the Appendix below.

The Takeover Code

The Acquisition gives rise to certain considerations under the Takeover Code. Under Rule 9 of the Takeover Code (“Rule 9”), any person who acquires an interest in shares (as defined in the Takeover Code), whether by a series of transactions over a period of time or not, which (taken together with any interest in shares held or acquired by persons acting in concert (as defined in the Takeover Code) with him) in aggregate, carry 30 per cent. or more of the voting rights of a company which is subject to the Takeover Code, that person is normally required by the Panel to make a general offer, in cash, to all of the remaining shareholders to acquire their shares.

The Company has agreed with the Takeover Panel that certain of the shareholders of DG Innovate should be considered to be “acting in concert” for the purposes of the Takeover Code (as such term is defined in the Takeover Code).  At Admission, following completion of the Acquisition and Subscription and conditional on the Rule 9 Waiver, the Concert Party will be interested in an aggregate of 4,468,274,325 Ordinary Shares representing approximately 50.5 per cent. of the Enlarged Share Capital. The members of the Concert Party and the interest of each member of the Concert Party in the Enlarged Share Capital are set out below in the appendix.

The Company has applied to the Panel for, and the Panel has agreed to, a waiver of the obligations under Rule 9 of the Takeover Code, subject to the passing of the Rule 9 Waiver Resolution by the Independent Shareholders on a poll at the General Meeting, to waive the obligation of the Concert Party, collectively and/or individually, to make a mandatory general offer under Rule 9 for the Ordinary Shares not already owned by it as would otherwise arise following the issue of the Consideration Shares and Concert Party Options.

Given that, following the issue of the Initial Consideration Shares the Concert Party will hold more than 50 per cent. of the voting share capital of the Company, any further acquisitions of the Company’s shares by any member of the Concert Party, whether individually or collectively, would normally not trigger any obligation under Rule 9 of the Takeover Code to make a general mandatory offer to Shareholders to acquire the entire issued share capital of the Company. However, notwithstanding the waiver and Rule 9 Waiver resolution, individual members of the Concert Party would not be able to increase their percentage interest in the Ordinary Shares of the Company through, or between, a Rule 9 threshold without the consent of the Panel.

Following Admission, should the Deferred Consideration Shares be issued in full and the Concert Party exercise the options held by them (assuming no new shares are issued in the meantime), the Concert Party will hold in aggregate a maximum of 5,414,930,957 Ordinary Shares representing approximately 54.5 per cent. of the Partially Diluted Enlarged Share Capital. Should the Concert Party holding fall below 50 per cent. prior to the issue of Deferred Consideration Shares and/or the Concert Party Options being exercised, subject to approval of the Rule 9 Waiver, the Concert Party will not be required to make a mandatory general offer as a result of the acquisition of Ordinary Shares pursuant to either the exercise of the Concert Party Options or the issue of the Deferred Consideration Shares.

Change of Name

To support the strategy going forwards, the Company is also proposing to change its name to DG Innovate plc, subject to the passing of the proposals and Admission. At that time, the Company’s stock ticker symbol will be changed to “DGI”. The Company’s website address will be changed to www.pathinvestmentsplc.com. An electronic copy of the Prospectus will also be submitted to the National Storage Mechanism and should be available shortly for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism

Publication of Prospectus 14 March 2022
Latest time and date for receipt of Forms of Proxy for the General Meeting 2.00 p.m. on 30 March 2022
Time and date of General Meeting 2.00 p.m. on 1 April 2022
Result of the General Meeting announced through RIS 1 April 2022
Cancellation of trading of Ordinary Shares 8.00 a.m. on 8 April 2022
Completion of the Acquisition 8 April 2022
Re-Admission and commencement of dealings on the London Stock Exchange of the Enlarged Share Capital 8.00 a.m. on 8 April 2022
Delivery of New Ordinary Shares into CREST as soon as practicable after 8:00 a.m. on 8 April 2022
New Ordinary Share certificates dispatched 15 April 2022

Admission Statistics

Number of Existing Ordinary Shares at the date of this announcement 2,029,463,802
Number of Initial Consideration Shares 5,397,451,305
Number of Subscription Shares 510,000,000
Number of Warrant Shares New Ordinary Shares issued on exercise of Warrants (0.25p) 830,800,000
Number of Fee Shares 75,000,000
Enlarged Share Capital 8,842,715,107
Gross Proceeds of the Subscription £2,550,000
Expenses relating to the Subscription £153,000
Net Proceeds of the Subscription receivable by the Company £2,397,000
Transaction Costs £1,081,319
Warrant Exercise Proceeds following exercise of Warrants (0.25p) £2,077,000
Initial Consideration Shares as a percentage of the Enlarged Share Capital 61.0%
Subscription Shares as a percentage of the Enlarged Share Capital 5.8%
Warrant Shares as a percentage of the Enlarged Share Capital 9.4%
Fee Shares as a percentage of the Enlarged Share Capital 0.8%
Subscription Price 0.5 pence
Market capitalisation at the Subscription Price on Admission £44,213,575.54

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Path Investments

Path Investments proposed acquisition of DG Innovate Ltd update

Path Investments plc (LON:PATH), has provided an update following the Company’s announcements on 13 August and 31 December 2021 that the Company had entered into a conditional sale and purchase agreement to acquire the entire issued share capital of DG Innovate Ltd.

Long Stop Date Extension

As previously announced, the Proposed Transaction is subject, inter alia, to the approval of Path’s independent shareholders and waiver of Rule 9 of the Takeover Code by the Takeover Panel, together with the publication of a prospectus and the application by the Company to have its enlarged share capital listed on the Standard Segment of the Official List and admitted to trading on the Main Market of the London Stock Exchange. Path and its advisers are making very good progress with the Proposed Transaction, including on the process of seeking approval of the FCA for the prospectus, and in order to allow time to conclude matters, including convening the required General Meeting of Path shareholders, it has now been agreed with DG Innovate to extend the long stop date for the satisfaction of all conditions to 31 March 2022.

Increased Secured Loan Facility

As part of the Proposed Transaction, as previously announced on 13 August and 22 September 2021, Path has provided a secured loan to DG Innovate of £600,000.  In view of the extended long stop date, it has been agreed with DG Innovate to increase the secured loan facility by up to a further £450,000. £150,000 of the Increased Facility has been provided to DG Innovate today and it may draw down a further £150,000 one calendar month from today’s date and a further £150,000 two calendar months from today’s date (subject to the posting of the Company’s prospectus to shareholders by 28 February 2022).

Amendment to the Terms of the Proposed Transaction

As announced on 13 August 2021, Path has entered into the Agreement to acquire DG Innovate for £32 million to be satisfied by the issue of 5,342,051,305 Path Ordinary Shares of £0.001 each at an issue price of 0.6 pence per Path Share. The Agreement has now been amended to provide for further conditional deferred consideration of £5.373 million to be satisfied by the issue of 895,610,844 Path Shares on the first anniversary of completion should DG Innovate sign at least two multi-year supply agreements for the provision of their motor technology with certain defined customers prior to this date.

Further announcements will be made by Path Investments in due course, as appropriate.  In the meantime, Path’s shares will remain suspended from trading on the London Stock Exchange.

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Path Investments plc

Path Investments updates on Proposed Transaction of DG Innovate

Path Investments plc (LON:PATH), has provided an update following the Company’s announcement on 13 August 2021 that the Company had entered into a conditional sale and purchase agreement to acquire the entire issued share capital of DG Innovate Ltd.

As previously announced, the Proposed Transaction is subject, inter alia, to the approval of Path’s independent shareholders and waiver of Rule 9 of the Takeover Code by the Takeover Panel, together with the publication of a prospectus and the application by the Company to have its enlarged share capital listed on the Standard Segment of the Official List and admitted to trading on the Main Market of the London Stock Exchange.  The Agreement, as amended on 26 October 2021, includes a long stop date for the satisfaction of all conditions of 31 December 2021.  Path and its advisers are making very good progress with the Proposed Transaction and in order to allow time to conclude matters, including convening in January 2022 the required General Meeting of Path shareholders, it has been agreed with DG Innovate to extend the long stop date for the satisfaction of all conditions to 28 February 2022.

Further announcements will be made in due course, as appropriate.  In the meantime, Path Investments’ shares will remain suspended from trading on the London Stock Exchange.

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Path Investments plc

Path Investments Proposed Transaction Update

Path Investments plc (LON:PATH), has provided today an update following the Company’s announcement on 13 August 2021 that the Company had entered into a conditional sale and purchase agreement to acquire the entire issued share capital of DG Innovate Ltd.

As previously announced, the Proposed Transaction is subject, inter alia, to the approval of Path’s independent shareholders and waiver of Rule 9 of the Takeover Code by the Takeover Panel, together with the publication of a prospectus and the application by the Company to have its enlarged share capital listed on the Standard Segment of the Official List and admitted to trading on the Main Market of the London Stock Exchange.  The Agreement included a long stop date for the satisfaction of all conditions of 31 October 2021.  Path and its advisers continue to progress the Proposed Transaction and it has been agreed with DG Innovate to extend the long stop date for the satisfaction of all conditions to 31 December 2021.

Further announcements will be made in due course, as appropriate. In the meantime, Path Investment shares will remain suspended from trading on the London Stock Exchange.

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Energy

Path Investments a transformational first half both financially and strategically

Path Investments plc (LON:PATH), the energy investment company, announced today its interim results for the six months to 30 June 2021.

Highlights

Successful equity fundraising in March 2021
Conditional Reverse Takeover of DG Innovate Limited (“DGI”) announced.
Loss before tax £736,254 (H1 2020 loss before tax of £163,699)
Loss per share 0.04 (H1 2020 loss 0.08 per share)

Commenting, Christopher Theis, Chief Executive of Path Investments, said : ” The first half of 2021 has been transformational for Path, both financially and strategically. We are very excited about our intended acquisition and welcoming the DGI business with its sustainable global energy technologies into Path.” 

The strategy of the Company is focused on delivering a material acquisition in the energy sector with the objective of providing the Company’s shareholders with access to a low risk and, over time, diversified portfolio which can offer a dividend stream as well as offering development potential for capital growth.

Chairman’s Report

In March 2021 the Company was delighted to receive the welcome support of new shareholders and certain existing holders in a fund raising with gross proceeds of £3.87 million received to accelerate the Company’s investment strategy. We said at the time that we were focussed on one opportunity and anticipated updating shareholders in due course.

Post the accounting period on 13th August 2021 we announced our conditional agreement to acquire DG Innovate Limited for £32 million to be satisfied by the issue of 5,342,051,305 Path Ordinary Shares of £0.001 each (“Path Shares”) at an issue price of 0.6 pence per Path Share, which compares favourably with the suspension price of 0.27 per Path share.

Further details of the transaction are contained on our website https://www.pathinvestmentsplc.com/proposed-acquisition-of-dg-innovate/

As part of the acquisition of DGI, and post the accounting period, Path provided from its cash resources a secured loan facility to DGI of £600,000.  The facility was made available in two tranches, both of which have now been released to DGI.

Work is progressing towards completion of the proposed transaction which constitutes a reverse takeover under the Listing Rules, as it will result in a fundamental change in the business of the Company. We are making good progress on finalising the necessary prospectus and shareholder documentation and we expect to be submitting it shortly for FCA approval.

The transaction is also subject to waiver of Rule 9 of the Takeover Code by the Takeover Panel and therefore the approval of Path’s independent shareholders at a General Meeting which will be convened for the purpose.

We look forward to updating shareholders further as we move towards completion of our transaction.

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Aerospace

Path Investments Annual General Meeting 28 September 2021

Path Investments plc (LON:PATH) , the natural resources investment company, has announced that the Company’s Annual General Meeting will be held on 28 September 2021 at 2.00 pm at the offices of IFC Advisory Limited, Birchin Court, 20 Birchin Lane, London EC3V 9DU.

Copies of the 2021 Annual Report and Notice of AGM will be sent to shareholders today and will be available on the Company’s website at: info@pathinvestmentsplc.com .

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Interviews

Path Investments acquisition of DG Innovate absolutely justified (Interview)

Path Investments plc (LON:PATH) CEO Christopher Theis joins DirectorsTalk Interviews following the release of interim results for the six months ended 30 June 2021. Chris explains how they came across DG Innovate, early impressions of the company, reaction to the announcement, what makes DGI special, target markets, Sodium-Ion battery technology and plans for the Prospectus.

https://vimeo.com/619670542

Path Investments PLC’s strategy is to seek to acquire energy and natural resource assets which are capable of both producing a near-term income as well as offering a development upside.

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Path Investments eyeing up potential acquisitions after successful fundraise (Interview)

Path Investments plc (LON:PATH) CEO Christopher Theis joins DirectorsTalk Interviews to discuss a conditional fundraise of £3,500,000. Chris provides investors with a little background to the company, why they raised the funds now and how they intend to deploy them and what investors should know about the company.

https://vimeo.com/514867932

Path Investments is focused on the natural resources sector on a global basis. Path Investments plc seeks to create value for its shareholders through acquisitions, joint ventures or direct interests in natural resources businesses or associated projects.

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Path Investments Plc ORD GBP0.001

INTERVIEW: Path Investments Plc Agreement with 5P Energy

Path Investments Plc ORD GBP0.001 (LON:PATH) CEO Chris Theis talks to DirectorsTalk about the conditional farm-in agreement with 5P Energy GmbH in relation to the potential acquisition of a 50% participating interest in a producing gas field, the Alfeld-Elze II Licence and Gas Field in Germany. Chris explains the background to the deal, the attraction, the terms and the next steps for the company.

https://vimeo.com/247471603

The Alfeld-Elze II Licence, encompasses the Alfeld-Elze / Hildesheimer Wald gas deposit (the “Field”), and covers a total area of 64.6 Km2. The Proposed Transaction meets the Company’s acquisition criteria, namely the acquisition of oil and gas production, or near production, assets which possess a lower risk profile than exploration or appraisal assets.

The Alfeld-Elze II Licence and Gas Field

The Licence on which the Field is situated is a production licence. It was previously split in two and was historically owned and operated by Mobil and Preussag respectively. The Field is a large fractured carbonate reservoir, with 2D seismic coverage, well control and good access to infrastructure. The Field is located onshore, 30 minutes’ drive, south of Hannover.

The Field previously produced 66 billion cubic feet (“Bcf”) of gas, from 9 wells, between 1972 and 1995, when the field was abandoned. The Field was brought back into production in 2015 by 5P Energy through the workover and re-entry of an old well (“Z2”) and the installation of processing facilities at the well site. Since 2015 this well has produced in excess of 2.5 Bcf of gas.

5P Energy has identified another old well candidate for workover and re-opening (“Z4”), located less than 1 km away from the existing producing well site. Drilling operations are underway and, subject to final approvals, commissioning of the second well is anticipated to start early in Q2 2018.

The Farm-in Agreement

The principal terms of the FIA are:

· Path to acquire a 50% participating interest in the Field;

· Path and 5P Energy to enter into a Joint Operating Agreement;

· The consideration payments are as follows:

o €5 million payable in cash on completion of the Proposed Transaction (“Completion”) as partial reimbursement of the Z2 costs;

o subject to Z4 achieving commercial production, a cash payment of €2 million as partial reimbursement of the Z4 costs accrued prior to 1 January 2018;

· Additional payments under the work obligation as follows:

o €10 million towards 100% of the costs of the drilling, logging, testing and completion of one or more new wells and if agreed the acquisition of 3D seismic over the Field;

o 50% of the Z4 costs incurred on or after 1 January 2018.

· Additional cash payments may become payable if certain milestones are successfully met following Completion.

Completion is conditional upon the following:

· Obtaining a legal opinion confirming that approval from the German anti-trust office (the Kartellamt) is not required for the Proposed Transaction or the German cartel authority clearing the Proposed Transaction;

· The Production Licence continuing in full force and effect;

· All approvals, consents and required permissions having been obtained by 5P Energy in respect of the current phase of the re-opening of Z4;

· Agreement by the parties to the 2018 Work Programme and Budget prepared by 5P Energy;

· The publication by Path of an admission document or a prospectus (as applicable) relating to the Proposed Transaction and the readmission of Path’s shares to trading on AIM in accordance with the AIM Rules or the Main Market and the Official List (as applicable) .

Equity fundraising

In order to fund the committed payments due under the Proposed Transaction the Company intends to undertake an equity fundraising (“Placing”).

Temporary Suspension

Completion of the Proposed Transaction is conditional, inter alia, on completion of the Placing, receipt of third party, legal and regulatory approvals or consents in relation to the Proposed Transaction. If completed, the Proposed Transaction would be classified as a reverse takeover in accordance with the Listing Rules of the Financial Conduct Authority. Accordingly, the Company has requested the listing of the ordinary shares of £0.001 each in the Company (“Ordinary Shares”) on the Standard Listed Segment of the Official List and trading in the Ordinary Shares on the Main Market of the London Stock Exchange be suspended with effect from 7:30am today. If the Proposed Transaction completes, the Company intends to seek either admission to trading on the AIM Market of the London Stock Exchange or readmission to trading on the Main Market of the London Stock Exchange. If the Company seeks admission to trading on the AIM Market it will request cancellation from the Official List and trading on the Main Market.

The parties intend to proceed as quickly as possible with the Proposed Transaction. However, there can be no certainty that the Proposed Transaction will be successfully completed.

Path Investments PLC ORD GBP0.001 will make further announcements in due course, as appropriate.

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Question & Answers

Acquisition

Path Investments Q&A: Strong edge to deliver on transactions that shareholders will find attractive (LON:PATH)

Path Investments plc (LON:PATH) Chief Executive Officer Christopher Theis caught up with DirectorsTalk to discuss the £3.5 million fundraise, what the proceeds will be used for and what investors should know about the company.

Q1: Chris, you’ve announced a £3.5 million fundraise earlier, Path Investments will be new to many of our viewers so could you just give us an overview of the company and what your focus is on?

A1: We originally listed on the standard list in 2017 as a cash shell and we set about looking for opportunities to acquire assets or companies which would be both cash generative and showed some capital growth for shareholders.

We raised at the time £1 million and we’ve eked that out for the last four years and we’ve looked at a number of transactions but for various reasons we weren’t happy with what we saw in the end. So, we’ve raised another £3.5 million today, we are looking at a number of very exciting opportunities and we do hope to get back to shareholders in due course on this.

The money is being used to further our investment strategy.

Q2: Moving forward, you’ll be receiving the £3.5 million in the coming weeks, that’ll be when the prospectus is published, can you tell us a bit more about why you’ve raised the funds now and how you intend to deploy them?

A2: Raising money now is a function of negotiation power for acquisitions, quite often the most attractive acquisitions are, in my opinion, quite a lot of people say to you ‘that’s fine but show me the money’.

With a number of the potential acquisitions we’ve been looking at, there’s a certain commonality in terms of cash requirements. So, having the cash available at this stage to have those meaningful conversations with the companies means that we’re in a much much stronger position to extract the sort of deal we want to be doing for shareholders.

Q3: These are obviously exciting times for Path Investments and there appear to be plenty of potential opportunities, is there anything else that people should know about the company?

A3: I think we’ve got a very experienced group of directors and they are experienced in an awful lot of sectors. They’re very well versed with the entire acquisition format in terms of the requirement for the prospectuses and the various markets and the various investors and what investors are specifically looking for. So, I think we have a very strong edge there to able to deliver on that and transactions, as I say, shareholders I’m sure will find attractive.

Our backgrounds are from the corporate finance, from the research and from the general corporate world and also, having founded a number of companies myself, quite a bit of experience in the M&A world, as indeed do the others.

So, all in all, I think as a team we are very well set for finding that acquisition which we believe we can deliver on which shareholders will be expecting us to do so.

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Path Investments Plc ORD GBP0.001

Path Investments PLC Q&A with CEO Chris Theis (LON:PATH)

Path Investments PLC ORD GBP0.001 (LON:PATH) Chief Executive Officer Chris Theis caught up with DirectorsTalk for an exclusive interview to discuss the new farm-in agreement with 5P Energy

 

Q1: You’ve announced a conditional farm-in agreement with 5P Energy today, could you explain the background to this?

A1: We are an oil and gas investment company and listed on the official list, by way of a standard listing on the 30th March of this year. We came with the stated objective to acquire oil and gas production or near-production assets taking advantage of the imbalance we see within the marketplace at the present time. We’re looking to build a portfolio of income-producing assets with some development potential so we’re looking to deliver a premium yield but also, at the same time, some capital growth as we look to develop the asset, in other words to bring production forward, if you like.

The first asset purchase we’ve announced today is a farm-in of a 50% participating interest in the Alfeld-Elze II production licence in Germany which is about half an hour south of Hanover. It’s a conventional on-shore gas field and we can talk a little bit more about that later if you like.

 

Q2: Now, Path Investments was set up to seek a suitable transaction in the oil and gas sector, what attracted you to this deal?

A2: Our stated aim was very much on-shore gas, we’re looking at oil too but at the moment we’re prefer gas and we prefer conventional gas in Europe and beyond, so North Africa, there’s more than enough to be getting on with in terms of opportunities and this particular opportunity fits the bill perfectly for us.

We’ve been targeting small to medium-sized opportunities and we are focussed very much on low risk so no exploration so no appraisal, it’s very much production we’re looking for, so we are designed to be very much a low risk resource play and importantly, and critically, the assets have to be economic at today’s prices.

So, we’re looking through this with a prism of financial hurdles and looking to get paid so it’s all very well taking advantage of that imbalance in the market but ultimately, if you’re not going to get paid then it’s not something we should even be entertaining.

We are looking to create, as we do in this particular instance and forward for others we’re looking at, a 15-20-year annuity stream and we are looking to join the dividend listers at the first possible opportunity.

 

Q3: What are the principal terms of the transaction?

A3: Well, as I said, we are acquiring a 50% participating interest in the field and we’ll be entering into a joint operating agreement at completion. We’re playing them €5 million, in cash, on completion and that is partial reimbursement of the existing producing well called Z2 and we’re, again as the announcement mentions, currently drilling a second well by way of re-entry and we are looking to repay €2 million of those costs next year, once commercial production has been achieved from that well. We’re also looking to contribute towards the cost of drilling a horizontal well to the tune of about €10 million and we also have some additional cash payments based upon success criteria in the main production totals.

So, all in all, it’s very cash generative, in fact the deal has an effective date of 1st January so all the cash that’s accruing from gas sales from that date onwards become ours, well 50% of them. At the same time, we become responsible for 50% of the costs of running the wells.

 

Q4: Following today’s news, what are the next steps for Path Investments PLC ORD GBP0.001?

A4: We’ve spent the last 3 or so years talking to a lot of businesses out there, mainly in the small to medium size arena, who typically have some production. They’re taking the cash from that production and recycling it to basically keep their exploration obligations alive so there’s not a lot of cash available to distribute to shareholders.

Our model is quite different and so from that we generated quite a large pipeline of opportunities and this is the first of those opportunities that we’re bringing to market. We are looking to complete this by way of equity fundraise and from that fundraise, we’ll be paying the consideration that I mentioned a moment ago and also giving us a bit of cash to seed other transactions over the next 12 months.

This project fits the strategy perfectly for us with its existing production, with its low risk and with its proven reserves so we’ve got a good handle on the life of the project and the cash we can expect to generate from it. So, within January, we’re be looking to complete the transaction and thereon in we’ll be looking to bring other deals to our shareholders over the next 12 months.

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