THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to what action to take, you should consult your stockbroker, solicitor, accountant or other appropriate independent professional adviser authorised under the Financial Services and Markets Act 2000. If you have sold or otherwise transferred all your shares in IPSA Group PLC, please forward this document and the accompanying Form of Proxy to the person through whom the sale or transfer was effected, for transmission to the purchaser or transferee. IPSA GROUP PLC (Incorporated and registered in England and Wales with Registered Number 05496202) NOTICE OF GENERAL MEETING PROPOSAL FOR DISPOSAL OF ASSETS A General Meeting will be held at the offices of WH Ireland Limited at 24 Martin Lane, London EC4R 0DR on 16 February 2016 at 2.30 p.m. A Form of Proxy for the General Meeting is enclosed and should be completed and returned as soon as possible. To be valid, it must reach the Company s registrars, Neville Registrars Limited of Neville House, 18 Laurel Lane, Halesowen, West Midlands, B63 3DA, no later than 48 hours before the meeting, being 2.30 p.m on 12 February 2016 or (if you are a shareholder resident in South Africa) Computershare Investor Services (Pty) Ltd of Ground Floor, 70 Marshall Street, Marshalltown, 2001, South Africa as soon as possible but in any event no later than 2.30 p.m. (GMT+2) on 12 February 2016. Completion and return of the Form of Proxy will not prevent you from attending and voting at the General Meeting in person, should you so wish.
DEFINITIONS In this document, the following expressions shall have the following meanings, unless the context otherwise requires: AIM Rules AIM Blazeway the AIM Rules for Companies published from time to time by London Stock Exchange PLC; the market of that name operated by London Stock Exchange PLC; Blazeway Engineering Limited, a wholly owned subsidiary of the Company registered in England and Wales with registration number 05356014; the Board or the Directors the directors of the Company listed on page 4; Company or IPSA Disposal Ethos IPSA Group PLC, a company registered in England and Wales with number 05496202; the proposed disposal of the Company s interest in Blazeway to Sloane Corporation as described in this document; Ethos Energy Italia S.P.A., the major creditor of the Company; General Meeting the general meeting of Shareholders convened for 16 February 2016, notice of which is set out on pages 7 to 9 of this document; Group IDC NewCogen Ordinary Shares Resolution Shareholders Sloane Corporation SPA the Company and its subsidiaries; The Industrial Development Corporation of South Africa Limited, a provider of loan finance to NewCogen; Newcastle Co-generation (Pty) Limited, the Company s South African operating subsidiary owned through Blazeway; the Company s ordinary shares of 2 pence each; the resolution to be proposed at the General Meeting; holders of the Ordinary Shares; Sloane Corporation Limited, a company registered in England and Wales with registration number 07518886; and the sale and purchase agreement dated 27 January 2016 between IPSA and Sloane Corporation. 2
EXPECTED TIMETABLE OF PRINCIPAL EVENTS 2016 Posting of the Notice of General Meeting and Forms of Proxy Latest time and date for receipt of Forms of Proxy General Meeting of the Company on 1 February 2.30 p.m. on 12 February 2.30 p.m. on 16 February 3
IPSA GROUP PLC (Incorporated in England and Wales with Registered Number 05496202) Directors: Richard Linnell (Non-Executive Chairman) Neil Bryson (Non-Executive Director) Mark Otto (Executive Director) Registered Office: c/o Pinsent Masons LLP 30 Crown Place Earl Street London EC2A 4ES 1 February 2016 Dear Shareholder General Meeting 16 February 2016 Proposed Disposal of Subsidiary and Related Matters Shareholders will be aware that trading in our shares on AIM was suspended on 24 September 2015 when the Company announced that it was unable to publish its financial statements for the year ended 31 March 2015 by 30 September 2015 as required by AIM Rule 19 pending publication of its Annual Report and Accounts. The Board has stated in recent announcements that the Company is dependent on the forbearance of its creditors. Our efforts have continued to seek ways to secure the survival of the Company for the benefit of all shareholders and I am writing to you now to bring you up to date and to explain to you our proposals for the near future for IPSA. On 28 January 2016 we announced that we had conditionally agreed to sell our 100 per cent. interest in Blazeway, the company which owns our sole operating asset in Newcastle, Kwa Zulu Natal, South Africa through its wholly owned South African subsidiary, NewCogen, to Sloane Corporation, a privately owned company. The sale consideration is cash of 50,000 and non-cash of 1,816,000 in the form of the assumption of certain indebtedness of the Company equivalent in total to consideration of 1,866,000. The Disposal, if consummated, represents a disposal of the Company s sole operating asset and is therefore a fundamental disposal under AIM Rule 15, which would result in the Company being classified as an AIM Rule 15 cash shell, which would require the Company within six months of the Disposal to make an acquisition or acquisitions which will constitute a reverse takeover under AIM Rule 14. The net proceeds of the Disposal after costs will be applied in settlement of a proportion of the Company s current creditors. Following the Disposal, the Company will retain some residual assets in the form of the balance of plant associated with its former TG50D5 gas turbines which were sold to Rurelec PLC in June 2013 and a receivable from Rurelec PLC. The purpose of this letter is therefore to give you more information regarding the Disposal and to seek your approval to it. Sale of Blazeway The Company previously announced that its working capital was extremely tight and it has been reliant on the forbearance of its creditors and facing the possibility that the Company may be put into administration. As a result of the failure of one of NewCogen s gas turbines in November 2015, the working capital and creditor position have deteriorated still further. Following a marketing exercise conducted by IPSA to seek a buyer of all of or a significant interest in NewCogen, which to date has not resulted in any offer acceptable to the Company, an unsolicited offer has been received from Sloane Corporation which has agreed to assume responsibility for settling the majority of the Company s creditors with a few exceptions including Ethos. The latter has been notified that the Company intends to honour its payment obligations through the sale of balance of plant held in storage in Italy and from the balance of funds still owed to the Company by Rurelec PLC. 4
The principal terms of the Disposal are as follows: initial upfront cash consideration of 50,000 for the Company s shares in Blazeway, payable on execution of the SPA, which sum will be converted to a loan to the Company in the event that the sale is not consummated as a result of any condition precedent not being satisfied; Sloane Corporation has already paid a further 50,000 in satisfaction of certain of NewCogen s outstanding liabilities, which sum will be converted to a loan to NewCogen in the event that the sale is not consummated as aforesaid; Sloane Corporation has agreed to deposit on execution of the SPA the sum of 280,000 into escrow with the Company s nominated adviser to be drawn down and used to settle creditors and obligations of NewCogen up to this amount both prior to and following completion of the Disposal; and Sloane Corporation has formally undertaken through covenants in the SPA and through agreements reached with third party creditors of the Company to assume liability for up to 1,866,000 of existing creditors of the Company. the Disposal is conditional upon: requisite approval from Shareholders of the Disposal; the approval of IDC under the terms of the loan agreement between NewCogen and IDC; the formal assumption by Sloane Corporation of 1,866,000 of indebtedness of the Company, which assumption is subject to those creditors consent. If Shareholders do not approve the Disposal, the Company and NewCogen will enter into loan agreements with Sloane Corporation to repay all sums provided under the arrangements described above. As noted above, the conditional agreement to dispose of the Company s interest in Blazeway is subject, inter alia, to the approval by Shareholders of the resolution to that effect which will be tabled at the forthcoming General Meeting. Sloane Corporation is managed by Peter Earl, an experienced company director with over twenty years experience in the power industry. The Directors believe that the sale of Blazeway will preserve jobs at the operating power plant in Newcastle, which is an area of high unemployment in South Africa. Sloane Corporation is wholly owned by Peter Earl, a former director of the Company. As Peter Earl left the IPSA board in July 2015, the transaction will be treated as a related party transaction under the AIM Rules. The Directors consider, having consulted with WH Ireland Limited, the Company s nominated adviser, that the terms of the transaction are fair and reasonable insofar as Shareholders are concerned. In the year ended 31 March 2014, the audited loss before tax of Blazeway was 2,011,155 and net assets were negative 2,411,115. In the year ended 31 March 2015, the unaudited loss of Blazeway was 227,529 and the net assets were negative 2,638,644. In the absence of other funding solutions in the available timeframe, the Company has concluded that the sale of Blazeway is the only way to avoid having to place NewCogen into business rescue which in turn would result in a likely administration for IPSA. Whilst the financial position of IPSA will remain critical following the proposed sale as a result of the amount owed to Ethos of approximately 3.2 million, the Company will focus its attention in the near term on seeking to satisfy its remaining creditors from the sale of the balance of plant and the collection of the funds owing by Rurelec PLC. AIM Rule 15 Cash Shell On completion of the proposed Disposal, the Company will be deemed to be an AIM Rule 15 cash shell for the purposes of the AIM Rules and will have six months in which to make an acquisition or acquisitions which will constitute a reverse takeover under AIM Rule 14. 5
Actions to be Taken You will find accompanying this document a form of proxy for use in connection with the General Meeting. Whether or not you intend to be present at the General Meeting, you are asked to complete the Form of Proxy in accordance with the instructions printed in it so as to be received by the Company s registrars, Neville Registrars Limited of Neville House, 18 Laurel Lane, Halesowen, West Midlands, B63 3DA or (if you are a shareholder resident in South Africa) Computershare Investor Services (Pty) Ltd of Ground Floor, 70 Marshall Street, Marshall Town, 2001, South Africa, as soon as possible but in any event no later than 2.30 p.m. on 12 February 2016. Completion and return of the Form of Proxy will not prevent you from attending and voting at the General Meeting, should you so wish. Recommendation The Directors consider that the Disposal is in the best interests of the Company and Shareholders as a whole. Accordingly, the Directors recommend that you vote in favour of the Resolution at the General Meeting as they intend to do so in respect of their own beneficial holdings amounting in aggregate to 50,000 Ordinary Shares representing 0.05 per cent. of issued Ordinary Shares. In addition, the Company has received voting undertakings in support of the Resolution from Shareholders representing a further 29.57 per cent. of the issued Ordinary Shares. Yours sincerely Richard Linnell Non-Executive Chairman 6
IPSA Group PLC (the Company ) (Company No. 05496202) NOTICE OF GENERAL MEETING Notice is hereby given that a General Meeting of the Company will be held at the offices of WH Ireland Limited at 24 Martin Lane, London EC4R 0DR at 2.30 p.m. on 16 February 2016 for the purpose of considering and, if thought fit, approving the following resolution, which will be proposed as an ordinary resolution: ORDINARY RESOLUTION That the disposal by the Company of its 100 per cent. interest in its subsidiary Blazeway Engineering Limited, to Sloane Corporation Limited substantially on the terms set out in the Company s circular to shareholders dated 1 February 2016 be approved. By Order of the Board Registered Office IPSA Group PLC c/o Pinsent Masons LLP 30 Crown Place Earl Street London EC2A 4ES Susan Laker Company Secretary 1 February 2016 Notes: 1. A member of the Company entitled to attend and vote at the meeting convened by the notice set out above is entitled to appoint one or more proxies to attend, speak and vote in that member s place. A proxy need not be a member of the Company. More than one proxy may be appointed to exercise the rights attaching to different shares held by the member but a member may not appoint more than one proxy to exercise rights attached to any one share. A form of proxy is enclosed. To appoint more than one proxy, you may photocopy the enclosed form of proxy. 2. To be effective, completed forms of proxy and the power of attorney or other authority (if any) under which they are signed or a copy of that power or authority certified notarially or in accordance with the Powers of Attorney Act 1971 must be lodged in accordance with the instructions printed thereon and must be received by hand or by post by Neville Registrars Limited of Neville House, 18 Laurel Lane, Halesowen, West Midlands, B63 3DA by 2.30 p.m. on 12 February 2016, or not later than 48 hours before the time appointed for any adjourned meeting. Alternatively, members who are resident in South Africa may lodge completed forms of proxy and such other documents so as to be received by hand or by post by Computershare Investor Services (Pty) Ltd, Ground Floor, 70 Marshall Street, Marshalltown, 2001, South Africa by 2.30 p.m. (GMT+2) on 12 February 2016, or not later than 48 hours before the time appointed for any adjourned meeting. 3. Completion and return of a form of proxy (or any CREST Proxy Instruction as described in paragraphs 6 to 9 below) will not preclude a member from attending and voting at the meeting in person should they wish to do so and are so entitled. 4. The Company, pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, specifies that only those members registered in the register of members of the Company as at 6.00 p.m. on 12 February 2016 or at 6.00 p.m. on the date which is two days before any adjourned meeting shall be entitled to attend and vote at the meeting in respect of the number of shares registered in their name at that time. Changes to entries in the register of members after that time shall be disregarded in determining the rights of any person to attend or vote at the meeting and for the purpose of determining the number of votes a member may cast. 5. In the case of a member which is a corporation, the form of proxy must be executed under its common seal or signed by an officer of the corporation or an attorney for the corporation. Alternatively a member who is a corporation can appoint one or more corporate representatives who may exercise, on its behalf, all of the powers as a member provided that they do not do so in relation to the same shares. A resolution of the directors, or other governing body, of the corporation will be 7
required in order to evidence the valid appointment of the corporate representative, in accordance with section 323 of the Companies Act 2006. 6. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for this meeting and any adjournment(s) thereof by using the procedures described in the CREST Manual (available via www.euroclear.com/crest). CREST personal members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf. 7. In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a CREST Proxy Instruction ) must be properly authenticated in accordance with the specifications of Euroclear UK & Ireland Limited ( Euroclear ), and must contain the information required for such instruction, as described in the CREST Manual. The message, regardless of whether it constitutes the appointment of a proxy or is an amendment to the instruction given to a previously appointed proxy must, to be valid, be transmitted so as to be received by Neville Registrars (participating ID 7RA11) by the latest time for receipt of proxy appointments specified in this notice of meeting. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Application Host) from which the issuer s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means. 8. CREST members and, where applicable, their CREST sponsors, or voting service provider should note that Euroclear does not make available special procedures in CREST for any particular message. Normal system timings and limitations will, therefore, apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member, or sponsored member, or has appointed a voting service provider, to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting system provider are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. 9. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001. 10. In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the Company s register of members in respect of the joint holding (the first-named being the most senior). 11. If you submit more than one valid proxy appointment, the appointment received last before the latest time for the receipt of proxies will take precedence. 12. As at 29 January 2016 (being the last practicable date prior to the publication of this notice of meeting) the Company s issued share capital consists of 107,504,081 ordinary shares carrying one vote each. Therefore the total voting rights in the Company as at 29 January 2016 are 107,504,081. 13. Except as provided above, members who have general queries about the General Meeting should call Neville Registrars shareholder helpline between 9.00 a.m. and 5.00 p.m. Monday to Friday (except UK public holidays) on 0121 585 1131 from within the UK or +44 121 585 1131 if calling from outside the UK. No other methods of communication will be accepted. You may not use any electronic address provided either in this notice of meeting or any related documents (including the Chairman s Letter and Forms of Proxy) to communicate with the Company for any purpose. 14. Your personal data includes all data provided by you, or on your behalf, which relates to you as a shareholder, including your name and contact details, the votes you cast and your reference number (as attributed to you by the Company or its registrars). The Company determines the purposes for which, and the manner in which, your personal data is to be processed. The Company and any third party to whom it discloses the data (including the Company s registrars) may process your personal data for the purposes of compiling and updating the Company s records, fulfilling its legal obligations and processing the shareholder rights you exercise. 8
SCHEDULE 1 EXPLANATORY NOTE TO THE NOTICE OF GENERAL MEETING The Resolution will be proposed as an ordinary resolution. This means that for this resolution to be passed, more than half of the votes cast must be in favour of the resolution. 9
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