Ascent Resources PLC

 ("Ascent" or the "Company")

Variation of Terms of 2013 and 2014 Convertible Loan Notes

Approval of the Waiver by the Takeover Panel

Notice of General Meeting

Further to the announcement of 24 December 2014, Ascent announces that it has today entered into a refinancing of the 2013 Convertible Loan Notes and the 2014 Convertible Loan Notes with Henderson, the majority holder of the Loan Notes.

Variation of Terms of 2013 and 2014 Convertible Loan Notes

To date £4.95 million has been drawn under the 2013 CLNs and £3.5 million has been drawn under the 2014 CLNs. The remaining £0.5 million as yet undrawn under the 2014 CLNs is expected to be drawn in the next few weeks. In total, including accrued interest, some £10 million in aggregate was due for repayment under the 2013 and 2014 CLNs, in part on 23 December 2014 and in part on 31 January 2015.

In return for extending the maturity date of the Loan Notes and terminating the accrual of further interest, the board of Ascent has agreed to adjust the conversion price in respect of both the 2013 and 2014 Convertible Loan Notes from 0.5p and 0.2p respectively to 0.1p for all Loan Notes.

Rule 9 Whitewash

On a fully diluted basis, and assuming full conversion of the Loan Notes currently held by them, Henderson is currently interested in 71.0% of the total voting rights of the Company. Following the variations to the Loan Notes made today, Henderson will, on conversion of the Loan Notes held by them, on a fully diluted basis, assuming full draw down of the 2014 CLNs and assuming only Henderson convert, be interested in 88.6 per cent. of the total voting rights of the Company, which, without a waiver of the obligations under Rule 9 of the Takeover Code, would oblige Henderson to make a general offer to Shareholders under Rule 9 of the Takeover Code. The Takeover Panel has agreed, however, to waive this obligation subject to Independent Shareholder consent being obtained to approve the Waiver.

Circular

A Circular will shortly be posted to shareholders, the purpose of which is, amongst other things, to provide Shareholders with details of the amendments to the Loan Notes, to explain the background to the Company's current position, and to explain why the Independent Directors consider that the terms of the Supplemental Loan Note Instruments giving effect to the amendments and the Waiver are fair and reasonable and in the best interests of Independent Shareholders generally and the Company as a whole. Extracts from the Circular can be found below.

Notice of General Meeting

Contained in the Circular is a notice of general meeting of Ascent to be held on 19 February 2015 at 10.30 a.m. at the offices of finnCap Limited, 60 New Broad Street, London EC2M 1JJ.

Other

Unless otherwise defined, all capitalised terms in this announcement shall have the meaning given to them in the Circular, which can be found on the Company's website www.ascentresources.co.uk.

Enquiries:

Ascent Resources PLC                                                                                              0207 251 4905

Clive Carver, Chairman

Len Reece, CEO

finnCap Limited, Nominated Adviser                                                             0207 220 0500

Charlotte Stranner

The following text has been extracted from the circular:

1.    Introduction

I am writing in connection with the 2013 Convertible Loan Notes and the 2014 Convertible Loan Notes currently in issue and in particular to set out certain resolutions your Board is recommending to shareholders which are required to implement the terms of an agreement entered into between the Company and Henderson, which holds some 97.1 per cent. of the Loan Notes in issue, on 2 February 2015.

In summary, a repayment of £3.7 million (including accrued interest) in respect of the 2014 Loan Notes became due on 23 December 2014 and remains outstanding.  Repayment of a further £5.8 million (including accrued interest) in respect of the 2013 Loan Notes became due on 31 January 2015. The Company does not have the funds required to repay the amounts due.

Your Board has therefore agreed, in return for extending the maturity date of the Loan Notes and terminating the accrual of interest on them, to adjust the conversion price applicable to both the 2013 and 2014 Loan Notes from 0.5p and 0.2p respectively to 0.1p for all of the Loan Notes. Further details of the variations made to the Loan Notes are set out below in paragraph 4 of this letter.

On a fully diluted basis, and assuming full conversion of the Loan Notes held by them, Henderson was previously interested 71.0% of the total voting rights of the Company. Following the variations to the Loan Notes as set out below in paragraph 4 of this letter, Henderson will, on conversion of the Loan Notes held by them, on a fully diluted basis, assuming full draw down of the 2014 CLNs and assuming only Henderson converts, be interested in 88.6 per cent. of the total voting rights of the Company, which, without a waiver of the obligations under Rule 9 of the Takeover Code, would oblige Henderson to make a general offer to Shareholders under Rule 9 of the Takeover Code. The Takeover Panel has agreed, however, to waive this obligation subject to Independent Shareholder consent being obtained to approve the Waiver.

2             Background

2013 CLNs

On 24 December 2012 Henderson agreed to subscribe for up to £5.5 million of convertible 9 per cent. loan notes, convertible at any time at the discretion of the holder into Ordinary Shares at 200 Ordinary Shares per £1 principal of loan note, an effective conversion price of 0.5p per Ordinary share. A first tranche of £3 million was drawn immediately and the remaining £2.5 million was made available to all Shareholders at that time by way of an open offer giving Shareholders the opportunity to subscribe for 2013 CLNs on identical terms to Henderson, or to subscribe for new Ordinary Shares at 0.5 pence per Ordinary Share.

Of the aggregate £5.5 million raised from the issue of the 2013 CLNs and the open offer referred to above, Henderson subscribed £4.8 million in the form of 2013 CLNs and other Shareholders subscribed £0.7 million of which £0.3 million was in the form of 2013 CLNs and the remaining £0.4 million was in the form of new Ordinary Shares. Clive Carver, Chairman, and Len Reece, CEO, subscribed £17,500 and £63,644 in the form of 2013 CLNs respectively.

2014 CLNs

In February 2014, following further Petišovci project delays during 2013, the Company agreed with Henderson to create a new £5 million class of 9 per cent. convertible loan notes, convertible at any time at the discretion of the holder, into Ordinary Shares at 100 Ordinary Shares per £1 principal of loan note, an effective conversion price of 1p per Ordinary share.

The first £2 million available under the 2014 CLNs was drawn immediately with the balance intended for sale to independent third party investors, with the intention that the pricing of all the 2014 CLNs would be reset to the lowest price paid by these new investors.

GPS Subscription

On 16 May 2014 Ascent announced a conditional subscription for new Ordinary Shares by GPS of £11.7 million at a price of 0.8p per Ordinary Share at the same time as an associated redemption and conversion of the 2013 and 2014 Convertible Loan Notes. Also announced was an additional subscription by GPS of a further £3.3 million, subject to conditions relating to the performance of the Petišovci project and the adjacent methanol plant in the period to 31 December 2014.

However, in July 2014, Ascent announced that it had been informed by GPS that GPS' joint venture partner had not placed GPS in funds to complete the initial subscription and accordingly the planned conversion and redemption of the 2013 and 2014 Convertible Loan Notes would not take place.

On 8 September 2014, by which time it had become clear that it would not be possible to secure investment from new third party subscribers for the £3 million balance undrawn under the 2014 Convertible Loan Note Instrument , the Company agreed with Henderson a variation to the terms of the 2014 Convertible Loan Note Instrument whereby Henderson agreed to subscribe for a further £2 million in principal of 2014 CLNs convertible into Ordinary Shares at 500 Ordinary Shares per £1  principal of loan note, an effective conversion price of 0.2p per Ordinary Share. Additionally, Henderson was granted security for all amounts due to Henderson at any time in connection with the Loan Notes in the form of an equitable mortgage over the shares in Ascent Slovenia Limited.

As part of the variation of the terms of the 2014 Convertible Loan Note Instrument the Company was given until 23 December 2014 to find alternative funding to repay the £2 million drawn in September 2014 in order to avoid the conversion price of the first £2 million of 2014 CLNs drawn down in February 2014 being rebased from 1p to 0.2p, which would have otherwise occurred under the terms of the original instrument.

Whilst there are a number of ongoing discussions relating to farm-ins to the Petišovci project none of these are likely to be completed until the IPPC permit is received. Given the uncertainty on the timing of the permit and as the Company has not been able to complete a funding transaction with GPS, the Company has been unable to raise such alternative funding to repay the £2 million drawn in September 2014.

3             Current position

During the past two years we have focused on:

·           disposing of assets in Hungary, the Netherlands, Switzerland and Italy to allow the available funding to be concentrated on the Company's Petišovci project;

·           renegotiating the agreements underpinning the Petišovci project to bring them into line with best International practice;

·           obtaining project funding to develop the first phase of the Petišovci project; and

·           securing the all-important Integrated Pollution Prevention & Control ("IPCC") permit to allow development of the Petišovci project to commence.

Asset disposals

The disposals of our assets in Hungary, the Netherlands and Switzerland were completed quickly and without incident.

In Italy the position was very different. After a marketing exercise it became clear that Ascent would have to pay a buyer to take ownership of the assets. An agreement was therefore completed with GPS under which GPS would acquire Ascent's Italian subsidiary Ascent Italia, as part of which Ascent issued 32,126,793 Ordinary Shares to GPS fully paid and GPS assumed all future work commitments and financial liabilities in relation to Ascent Italia.

Within a few months it became clear that Ascent was potentially in breach of warranties given to GPS concerning the validity of certain licences in which Ascent Italia was interested.  Accordingly, a settlement was reached with GPS whereby Ascent issued a further 260,000,000 Ordinary Shares to GPS in return for a full waiver from GPS of any and all claims or potential claims by GPS under the Ascent Italia SPA.

Agreements in relation to the Petišovci project

In October 2013 a new suite of agreements to international standards was entered into with our partners, which should allow the project to move ahead at a faster pace and which we hope will also facilitate the introduction of new capital.

Project funding

To date we have not been able to secure project funding. The principal issues being the uncertainty on the timing of the relevant permits and also nervousness on the part of one potential lender in relation to the duration of the well tests undertaken when Pg10 and Pg11A were first drilled.

We continue to discuss ways of introducing project funding to the project with two major banks that are supportive and have demonstrated a commitment to the project. At the date of this document we have not yet found a mechanism for turning that support into a workable funding proposal. In any event project funding will be conditional on securing the required IPPC permit, an update in relation to which is provided below.

IPPC permit

We require the IPPC permit in order to commence work at Petišovci. We were pleased to announce on 24 December 2014 that the Slovenian authorities had commenced a 30-day period of public consultation in respect of the permit. The public consultation period has now completed.  Ascent will be shown any objections lodged and will have an opportunity to respond.  Thereafter it will be for the Slovenian authorities to decide how to proceed.

 GPS Update

Since the failure of GPS to honour their commitment to invest £11.7 million in Ordinary Shares during the summer of 2014 we have been working with them to try to find an alternative way forward. However, GPS has informed the Company that it has experienced additional significant issues as the result of its acquisition of Ascent Italia which now makes the completion of any alternative transaction highly unlikely.

Whilst your Board does not believe the Company has any further liability to GPS in respect of Ascent Italia, it is of the view that pursuing GPS through the UK and Italian courts to seek redress for GPS's failure to perform under the Subscription Agreement does not makes commercial sense at this time.

4      Terms of the amendments to the 2013 CLNs and 2014 CLNs

To date £4.95 million has been drawn under the 2013 CLNs and £3.5 million has been drawn under the 2014 CLNs. The remaining £0.5 million as yet undrawn under the 2014 CLNs is expected to be drawn in the next few weeks. In total, including accrued interest, some £10 million in aggregate is or was due for repayment under the 2013 and 2014 CLNs, in part on 23 December 2014 and in part on 31 January 2015.

As referred to above, the Company's ability to raise additional finance to repay the 2013 CLNs and 2014 CLNs in the absence of IPPC permit and project funding is extremely limited. Accordingly on 2 February we entered into a refinancing of the 2013 CLNs and 2014 CLNs on terms agreed with Henderson, the holder of £8,193,917 in principal amount of the aggregate £8,451,907 in principal amount of Loan Notes currently in issue, as follows:

·           the 2013 Convertible Loan Note Instrument and the 2014 Convertible Loan Note Instrument have been amended to provide a maturity date of  either 19 November 2015 or, if earlier, the occurrence of a Liquidity Event;

·           the Loan Notes have an effective conversion price equivalent to 0.1p per Ordinary Share such that the holders of Loan Notes (assuming full draw down of the 2014 CLNs and assuming all Loan Note holders convert) will on conversion hold some 87.3 per cent. of the enlarged share capital of the Company on a fully diluted basis;

·           the Loan Notes have ceased to accrue interest as from and including 1 February 2015 and no interest payments in respect of interest already accrued will be made until the  Loan Notes are redeemed; and

·           no further adjustments to the effective conversion price will be permitted, unless the Company adjusts the nominal value of its Ordinary Shares.

Henderson holds 95 per cent. of the 2013 CLNs and 100 per cent. of the 2014 CLNs and on 2 February 2015  approved the loan note holder resolutions that were required to amend the 2013 CLNs and 2014 CLNs as described above. The other holders of 2013 CLNs are accordingly now subject to the same changes and as such, other holders of 2013 CLNs are no longer able to seek repayment of the 2013 CLNs held by them until the new maturity date described above.

Under the terms of the 2013 and 2014 Convertible Loan Note Instruments as originally drawn, holders of Loan Notes were protected in the event that a general offer was made for the Company which the Loan Note holders were not able to accept because the Directors did not have the authority to allot and issue new Ordinary Shares were the Loan Note holders to convert the Loan Notes held by them, or where conversion could take place for any other reason. In such circumstances there was a provision in the 2013 and 2014 Convertible Loan Note Instruments whereby the Loan Note holders were entitled to receive a repayment from the Company in cash equal to the amount that they would have received under the general offer had a conversion of the Loan Notes taken place.

As part of the amendments made to the Loan Notes on 2 February 2015, your Board has agreed an extension to that protection to cover all situations where, should the Independent Shareholders vote against the Proposals or conversion of the Loan Notes is not possible for any legal or regulatory reason, the amount payable to Loan Note holders on a Liquidity Event will be three times the principal value of the Loan Notes plus accrued interest.

This approximates to the change in the blended effective conversion rate of the Loan Notes, which was prior to 3 February 2015 approximately 0.3 pence and is now 0.1 pence.

5.    Rule 9 Whitewash

The Takeover Code governs, inter alia, transactions which have as their objective or potential effect obtaining (directly or indirectly) obtaining or consolidating control of a company to which the Takeover Code applies. Under Rule 9 of the Takeover Code, any person who acquires, whether by a series of transactions over a period of time or not, an interest in shares (as defined in the Takeover Code) which, taken together with shares in which persons acting in concert with him are interested, carry 30 per cent. or more of the voting rights of a company which is subject to the Takeover Code, is normally required to make a general offer to all the remaining shareholders of the relevant company to acquire their shares.

Similarly, Rule 9 of the Takeover Code also provides that when any person, together with persons acting in concert with him, is interested in shares which, in aggregate, carry more than 30 per cent. of the voting rights of such company, but does not hold shares carrying 50 per cent. or more of such voting rights, an offer obligation will arise if an interest in any other shares carrying voting rights is acquired from non-members of the group.

Rule 9 of the Takeover Code further provides, among other things, that where any person who, together with persons acting in concert with him, holds over 50 per cent. of the voting rights of a company, no obligations normally arise from acquisitions by any member of the concert party.

An offer under Rule 9 must be in cash and must be at the highest price paid by the person required to make the offer, or any person acting in concert with him, for any interest in shares of the company in question during the 12 months prior to the announcement of the offer.

Potential interests in Ordinary Shares of Henderson following the amendments to the terms of the 2013 and 2014 Convertible Loan Note Instruments

Following conversion of the Loan Notes (assuming full draw down of the 2014 CLNs and assuming only Henderson convert), and assuming no disposals of Ordinary Shares by Henderson and no further issues of Ordinary Shares by the Company in the meantime, the interests in Ordinary Shares of Henderson and the percentage of the voting rights in the Company attributable to such interests, assuming no other party subscribes for Ordinary Shares under Options or warrants, will be 9,903,618,084 Ordinary Shares, representing approximately 88.6 per cent. of the total voting rights of the Company at that time. This, without a waiver of the obligations under Rule 9 of the Takeover Code, would oblige Henderson to make a general offer to Shareholders under Rule 9 of the Takeover Code. The Takeover Panel has agreed, however, to waive the obligation on Henderson to make a general offer that would otherwise arise as a result of the conversion of the Loan Notes taking Henderson's holding to more than 30 per cent. of Ordinary Shares, subject to approval on a poll by the Independent Shareholders of the Whitewash Resolution as set out in the Notice.

The Waiver described in the Whitewash Resolution applies only in respect of increases in the percentage interest of Henderson over Henderson's current interest in Ordinary Shares resulting from the conversion of the Loan Notes and not in respect of other increases in Henderson's interests in Ordinary Shares. Henderson and holders of 2013 Convertible Loan Notes are not allowed to vote on the Whitewash Resolution.

Unless the Whitewash has been approved by Independent Shareholders or unless Henderson makes a successful takeover offer as required by the Takeover Code, Henderson will not be able to convert the Loan Notes held by them to the extent that as a result of such conversion, Henderson would hold 30 per cent. or more of the total voting rights of the Company.

Shareholders should be aware that if the Resolutions are passed and Henderson converts all of the Loan Notes held by them, Henderson will have a direct interest in more than 50 per cent. of the voting rights of the Company, and will be able to increase their aggregate interest in the Company without incurring any obligation under Rule 9 of the Takeover Code to make a general offer to all Shareholders to acquire their shares in the Company. However, Shareholders should also be aware that if the Resolutions are passed, Henderson will not be restricted from making an offer for the Company.

The intentions of Henderson

Henderson have confirmed to the Company that they are not proposing, following any increase in their percentage interest in Ordinary Shares or voting rights as a result of any conversion of the Loan Notes to seek any change in the composition of the Board or the general nature of the Company's business.

6.    Related Party Transaction

Henderson is a substantial shareholder in Ascent, holding 12.7 per cent. of the voting rights of the Company and as such is considered to be a related party of the Company as defined by the AIM Rules. The amendments to the Loan Notes therefore constitute a related party transaction pursuant to AIM Rule 13. The Independent Directors of the Company (being Nigel Moore, Cameron Davies and Colin Hutchinson), having consulted with the Company's nominated adviser, finnCap, consider that the terms of the Loan Notes as amended by the Supplemental Loan Note Instruments are fair and reasonable insofar as the Company's shareholders are concerned.

7.    Independence

As holders of 2013 CLNs, Clive Carver and Len Reece are deemed not to be independent for the purposes of making a recommendation to Independent Shareholders on the Proposals. Furthermore, Henderson, as the party subject to the Whitewash, will not vote on the Whitewash Resolution at the General Meeting. In addition, holders of 2013 Convertible Loan Notes, including Len Reece and Clive Carver, as beneficiaries of the Proposals, will also not be allowed to vote on the Whitewash Resolution at the General Meeting.

8.    General Meeting

Set out at the end of this document is a notice convening a General Meeting of the Company to be held at 10.30 a.m. on 19 February 2015 at the offices of finnCap, 60 New Broad Street, London, EC2M 1JJ, at which the following resolutions will be proposed:

The Company is proposing that Shareholders pass the Resolutions in order to:

(a)      approve the waiver granted by the Takeover Panel of Henderson's obligation to make a general offer to Shareholders for the entire issued and to be issued share capital of the Company pursuant to Rule 9 of the Takeover Code as a result of the allotment and issue of, equity securities to Henderson arising from the conversion of the Loan Notes held by them (this resolution requires voting on a poll by Independent Shareholders only);

(b)      grant authorityto the Directors under section551 of the Act, to allot relevant securities as required in relation to the conversion of the Loan Notes;and

(c)      empower the Directors, pursuant to section 570 of the Act, to dis-apply the statutory pre-emption rights in relation to the allotment of equity securities as required to allow conversion of the Loan Notes.

The reasons for the Whitewash Resolution are set out at paragraphs 1, 2 and 3 of this Part I. The Company does not have sufficient authority to issue the Conversion Shares arising from the conversion of the Loan notes, assuming that the Whitewash Resolution is passed, and therefore Resolutions 2 and 3 are proposed to grant the authority to the Board to make such issues.

9.    Action to be taken in respect of the General Meeting

Please check that you have received the following with this document:

·     a Form of Proxy for use in respectof the General Meeting; and

·     a reply-paid envelope for use in connection with the return of the Form of Proxy (in the UK only).

Whether or not you propose to attend the General Meeting in person, you are strongly encouraged to complete, sign and return your Form of Proxy in accordance with the instructions printed thereon as soon as possible, but in any event so as to be received, by post at Computershare Investor Services Plc, The Pavilions, Bridgwater Road, Bristol, BS99 6ZY or, during normal business hours only, by hand, at Computershare Investor Services Plc, The Pavilions, Bridgwater Road, Bristol, BS13 8AE by no later than 10.30 a.m. on 17 February 2015 (or, in the case of an adjournment of the General Meeting, not later than 48 hours before the time fixed for the holding of the adjourned meeting).

Alternatively, you can submit your proxies electronically by following the instructions on the website. Electronic proxy appointments must be received by 10.30 a.m. on 17 February 2015 or, in the case of an adjournment of the General Meeting, not later than 48 hours before the time fixed for the holding of the adjournedmeeting).

If you hold your shares in the Company in uncertificated form (that is, in CREST) you may vote using the CREST Proxy Voting service in accordance with the procedures set out in the CREST Manual (please also refer to the accompanying notes to the Notice of the General Meeting set out at the end of this document). Proxies submitted via CREST must be received by the Company's agent (ID 3RA50) by no later than 10.30 a.m.  on 17 February 2015 (or, in the case of an adjournment, not later than 48 hours before the time fixed for the holding of the adjourned meeting).

This will enable your vote to be counted at the GeneralMeeting in the event of your absence.The completion and return of the Form of Proxy or the use of the CREST Proxy Voting service will not prevent you from attending and voting at the General Meeting, or any adjournment thereof.

10. Recommendation

In the absence of alternative funding to repay the 2013 CLNs and 2014 CLNs, the Company believes that it has secured the best terms available from Henderson, being the majority holder of the Loan Notes.

Shareholders are advised that in the event that the Resolutions are not passed, then on 19 November 2015, or earlier in the event that a Liquidity Event occurs, the Company will become immediately liable to pay to Loan Note holders in cash three times the principal value of the Loan Notes plus accrued interest and Henderson, as the holder of the 2014 Convertible Loan Notes which are secured, will have the right to appoint a receiver to sell the shares in Ascent Slovenia Limited to achieve repayment. In such circumstances, the Company is unlikely to be able to continue as a going concern.

The Independent Directors therefore, having been so advised by finnCap, consider the amendments to the 2013 CLNs and 2014 CLNs pursuant to the Supplemental Loan Note Instruments and the terms thereof and the Waiver to be fair and reasonable and in the best interests of Independent Shareholders generally and the Company as a whole. In providing advice to the Independent Directors, finnCap has taken into account the Independent Directors' commercial assessments. Accordingly, the Independent Directors recommend that Shareholders vote in favour of the Resolutions and that Independent Shareholders vote in favour of the Waiver.

The Independent Directors intend to vote in favour of the Resolutions in respect of their aggregate shareholdings of 268,500 Ordinary Shares representing approximately 0.02 per cent. of the Company's existing issued Ordinary Shares.