Fastnet Demerges Oil, Gas Assets

Highlights

·     Transfer of the Company's existing oil and gas assets into a new company named Fastnet Hydrocarbons Limited ("Fastnet Hydrocarbons")
·     Fastnet Hydrocarbons is held by a trust for the future benefit of shareholders of the Company (the "Hive out")
·     Unsecured 4 year term loan granted for €660,000 to finance residual running costs of oil and gas assets
·     Fastnet will no longer have any ongoing interest or further cost exposure in respect of oil and gas assets

Cathal Friel, Non-Executive Chairman, commented, "Today's announcement positions Fastnet to focus exclusively on the Company's strategy of pursuing acquisition opportunities within the healthcare sector.

"Ring-fencing the Company's existing oil and gas assets in a trust structure is designed to allow the search for a buyer of these oil and gas assets to continue.

"In the event that this search process is completed, the Company's existing shareholders would receive any value generated from the disposal of these assets."

Details of transaction

Fastnet Hydrocarbons has acquired from the Company, for an aggregate sum of £1, the entire issued share capital of two of Fastnet's subsidiaries being Fastnet Oil & Gas (Ireland) Limited ("FOGI") and Pathfinder Hydrocarbon Ventures Limited ("PHVL") which hold the Celtic Sea and Moroccan oil and gas assets and liabilities respectively. The shares in Fastnet Hydrocarbons have been transferred into a bare trust ("Trust") established for the benefit of shareholders on the register of the Company as at the close of business on 16 December 2015, pro rata to their shareholdings in Fastnet at that date.  Cathal Friel has been appointed as director of Fastnet Hydrocarbons.

All investment of equity and debt in FOGI and PHVL was written down to nil in the audited accounts of Fastnet for the financial year ending 31 March 2015. All previous loans made by the Company to FOGI and PHVL have, to the extent not repaid out of cash reserves by FOGI or PHVL, been formally waived by Fastnet prior to the Hive Out, reflecting their impaired value.

Fastnet has made an unsecured 4 year term loan of an aggregate of €660,000 to FOGI and PHVL at an annual rate of interest of 4 per cent. above LIBOR in order that those entities are able to meet their respective obligations under the existing oil and gas licences and to facilitate an orderly winding down of FOGI and PHVL.

To the extent any future value is realised from Fastnet Hydrocarbons, FOGI and/or PHVL, the trustees of the Trust will arrange for any returns of capital or distributions made to it by Fastnet Hydrocarbons to be paid to beneficiaries of the Trust, being the current shareholders of Fastnet as described above. The terms of the loan require it to be settled in full, including all principal and accrued interest, immediately upon any change of control, disposal of business or all or substantially all of their assets or insolvency event of Fastnet Hydrocarbons (and each part of the loan made to FOGI and PHVL individually is immediately repaid on a change of control, disposal of the business or all or substantially all of their assets or insolvency event of FOGI and PHVL respectively). Fastnet Hydrocarbons, FOGI and PHVL all undertake not to pay any dividends or make any distributions to shareholders until the loan is repaid in full.

As a result of the Hive Out, Fastnet will no longer have any ongoing interest and will not have any further exposure to further costs that may be incurred in maintaining the licences within FOGI and PHVL.

Related Party Transaction

The acquisition of the shares in each of FOGI and PHVL by Fastnet Hydrocarbons constitutes a related party transaction under Rule 13 of the AIM Rules for Companies due to Cathal Friel's shareholding and role as director of both Fastnet and Fastnet Hydrocarbons.  The independent directors consider, having consulted with the Company's Nominated Adviser, that the terms of the transaction are fair and reasonable in so far as the Company's shareholders are concerned.