Aj Lucas Group Limited · ASX:AJL
Aj Lucas — Investor Presentation (June 2013)
40 slides from Aj Lucas's investor presentation, Jun 13, 2013
Slide 1: AJ Lucas Group Limited Capital Raising
AJ Lucas Group Limited 13 July 2013 For personal use only Capital raising Sale of part of Bowland interest to Centrica Balance Sheet Recapitalisation Plan Trading Update, Guidance and Forward Program
Slide 2: Disclaimer and Important Notice
Disclaimer and Important Notice For personal use only This Presentation has been prepared by AJ Lucas Group Limited (ACN 060 309 104) (AJL). Summary information This Presentation contains summary information about the AJ Lucas Group. This information is of a general nature and does not purport to be
Slide 3: Disclaimer and Important Notice (cont.)
Disclaimer and Important Notice (cont.) For personal use only Past performance Investors should note that past performance, including past share price performance and pro forma historical information in this Presentation is given for illustrative purposes only and cannot be relied upon as an indicat
Slide 4: Overview
Overview For personal use only • Sale of part of Bowland interest to Centrica – AJL and its 44% owned associate, Cuadrilla, have each agreed to sell 25% of their respective interests in the Bowland shale license (PEDL 165), located in Lancashire, England, to Centrica • AJL’s direct interest in Bowla
Slide 5: Sale of part of Bowland interest to Centrica
For personal use only Sale of part of Bowland interest to Centrica 5
Slide 6: Transaction Details
Transaction Details For personal use only • Centrica will invest up to GBP145mm ($235mm) to acquire a 25% interest in the Bowland license as follows: – Sale by: • AJL of 100% of shares in Lucas Energy (UK) Limited which holds 6.25% direct interest in Bowland license • Cuadrilla of 100% of shares in
Slide 7: Balance Sheet Recapitalisation Plan
For personal use only Balance Sheet Recapitalisation Plan 7
Slide 8: Overview of the Recapitalisation Plan
Overview of the Recapitalisation Plan For personal use only • Balance Sheet Recapitalisation Plan to raise gross proceeds of approximately $165.0mm (including AJL share of Bowland sale proceeds of $16.2mm) • Size and structure – Institutional Placement – 9.26m shares to raise approximately $11.1mm –
Slide 9: Overview of the Recapitalisation Plan (cont.)
Overview of the Recapitalisation Plan (cont.) For personal use only • Participation by AJL’s largest shareholder - Kerogen - of up to $85.3mm – Kerogen has confirmed its intention to take up its full pro-rata entitlement in the Entitlement Offer of circa $61mm – Kerogen has also entered into an Unde
Slide 10: Overview of the Recapitalisation Plan (cont.)
Overview of the Recapitalisation Plan (cont.) For personal use only • Retail Entitlement Offer – Proceeds raised under the Retail Entitlement Offer – approximately $32.5mm – Retail shareholders have the ability to apply for shares in excess of their entitlement – A select number of institutional inv
Slide 11: Kerogen Underwriting Agreement
Kerogen Underwriting Agreement For personal use only AJL has entered into an underwriting agreement with Kerogen in relation to the institutional component of the Entitlement Offer (other than in respect of shares that institutional shareholders have pre-committed to take up as part of their entitle
Slide 12: Forecast Net Debt Position and Use of Proceeds
Forecast Net Debt Position and Use of Proceeds For personal use only • AJL will use the proceeds of the Institutional Placement and Entitlement Offer to substantially reduce debt, support working capital requirements and pay for transaction fees associated with the Recapitalisation Plan – As part of
Slide 13: Relationship to recently announced debt facilities
Relationship to recently announced debt facilities For personal use only • On 31 May 2013, AJL announced that it had entered into 2 new debt facilities: • Facility Agreement with Athena for US$70mm (tranche 1 US$55mm, tranche 2, US$15mm) • Facility Agreement with Kerogen that is a restructure of thr
Slide 14: Benefits of the Recapitalisation Plan
Benefits of the Recapitalisation Plan For personal use only • Strengthens balance sheet – Recapitalisation will reduce AJL’s pro-forma net debt position • Net debt expected to be reduced to $69.3mm • No requirement to draw down under Athena facility • Interest expense significantly reduced – Improve
Slide 15: Pro forma substantial shareholders
Pro forma substantial shareholders For personal use only • The issue of new shares under the Institutional Placement and Entitlement Offer will have the following effect on AJL’s major shareholders: Shareholders Current Share Maximum pro- Share % shareholding (mm) % forma shareholding (mm) Kerogen I
Slide 16: Indicative Timetable
Indicative Timetable For personal use only Event Date Trading halt Friday 14 June Institutional Entitlement Offer and Placement After market Thursday 13 June to Friday 14 June Shares recommence trading on ASX on an ex entitlement basis Monday, 17 June Record date for eligibility in the Entitlement O
Slide 17: Trading Update, Guidance and Forward Program
For personal use only Trading Update, Guidance and Forward Program 17
Slide 18: 2013 Trading Update
2013 Trading Update For personal use only • Drilling – Trading environment remains challenging, reflecting soft market conditions for major coal mining companies and impact on mining services sector – In response, business has been restructured to reduce cost base • E&C – Exiting general contracting
Slide 19: 2014 Guidance
2014 Guidance For personal use only • Drilling – Trading environment expected to remain challenging due to downturn in the coal industry and impact on mining services sector – Capital expenditure to be minimised and margins maintained by further reducing operating costs • E&C – Focus on pipelines an
Slide 20: Current Forward Program for Cuadrilla
Current Forward Program for Cuadrilla For personal use only • Post completion of the sale of part of the Bowland interest to Centrica: – Cuadrilla and AJL will benefit from a GBP45mm free carry at Bowland – As a shareholder Cuadrilla, AJL will have the benefit of Cuadrilla’s GBP30mm cash to fund add
Slide 21: Key Risks and Other
For personal use only Key Risks and Other 21
Slide 22: Introduction
Key Risks For personal use only Introduction As with all businesses, there are a number of factors that are specific to AJL and of a general nature that may have a material impact on AJL’s future operating and financial performance. This Section describes certain specific areas that are believed to
Slide 23: Specific investing in the Offer Shares
Key Risks For personal use only 1. Specific risks relating to investing in the Offer Shares 1.1 Market Conditions The market price of shares can fall, as well as rise, and may be subject to varied and unpredictable influences. Neither AJL nor the Directors warrant the future performance of the Offer
Slide 24: Specific investing in the Offer Shares: ANZ senior facilities
Key Risks For personal use only 1. Specific risks relating to investing in the Offer Shares 1.4 ANZ senior facilities The failure by AJL to complete the Offer and repay the Senior Facilities could lead to enforcement or other actions which could have a material adverse effect on AJL’s business, pros
Slide 25: General risks: operating businesses of AJL
Key Risks For personal use only 2. General risks relating to the operating businesses of AJL and the markets in which it operates 2.1 Commercial, financial and operational risks As a business operating in the engineering, energy, mining and infrastructure sectors, AJL faces general commercial risks,
Slide 26: General risks: operating businesses (cont.)
Key Risks For personal use only 2. General risks relating to the operating businesses of AJL and the markets in which it operates (cont.) 2.3 Counterparty (client) payment risk In the ordinary course of business, AJL extends credit terms and relies on its clients for payments. Should a client enter
Slide 27: General risks: operating businesses (cont.)
Key Risks For personal use only 2. General risks relating to the operating businesses of AJL and the markets in which it operates (cont.) 2.5 Project delays Delays to the commencement or completion of work on projects have occurred from time to time and may occur in the future due to a variety of re
Slide 28: General risks: operating businesses (cont.)
Key Risks For personal use only 2. General risks relating to the operating businesses of AJL and the markets in which it operates (cont.) 2.8 Additional Funding Requirements and Financing Risk Even if the Recapitalisation Plan (including the Offer) is completed, depending on AJL’s capital requiremen
Slide 29: General risks: operating businesses (cont.)
Key Risks For personal use only 2. General risks relating to the operating businesses of AJL and the markets in which it operates (cont.) 2.10 Environmental Environmental laws and regulations in Australia and abroad can affect the operations of businesses, including AJL and entities in which it has
Slide 30: General risks: operating businesses (cont.)
Key Risks For personal use only 2. General risks relating to the operating businesses of AJL and the markets in which it operates (cont.) 2.11 Environmental (cont.) Private entities, including the owners of properties upon which AJL’s wells (or the operations of an entity in which AJL has an interes
Slide 31: General risks: operating businesses (cont.)
Key Risks For personal use only 2. General risks relating to the operating businesses of AJL and the markets in which it operates (cont.) 2.14 Reliance on Key Personnel Like other companies, AJL’s performance is dependent on the ability of its senior executives and key personnel to manage and grow i
Slide 32: General risks: operating businesses (cont.)
Key Risks For personal use only 2. General risks relating to the operating businesses of AJL and the markets in which it operates (cont.) 2.17 Labour disputes If any material disputes were to arise between AJL and its employees or sub-contractors, there would be potential for disruption to the opera
Slide 33: General risks: investments of AJL
Key Risks For personal use only 2. General risks relating to the investments of AJL 2.20 Regulatory risk AJL has an interest in a number of assets that are located in different jurisdictions. Accordingly, such assets are subject to risks particular to its location, such as changes in laws, practices
Slide 34: General risks: investments of AJL (cont.)
Key Risks For personal use only 2. General risks relating to the investments of AJL (cont.) 2.21 Inability to meet exploration licence funding obligations In addition to AJL’s investment in Cuadrilla, AJL owns an 18.75% direct interest in English exploration licences PEDL 165 in the Bowland basin an
Slide 35: General risks: investments of AJL (cont.)
Key Risks For personal use only 2. General risks relating to the investments of AJL (cont.) 2.24 Inability to recover unconventional hydrocarbons Cuadrilla’s ability to develop its concessions for unconventional hydrocarbons depends not only upon the presence of significant in-place hydrocarbon reso
Slide 36: General risks: investments of AJL (cont.)
Key Risks For personal use only 2. General risks relating to the investments of AJL (cont.) 2.25 Cuadrilla Change of Control Event The holding by Lucas Cuadrilla of shares in Cuadrilla is subject to the terms of the Cuadrilla Shareholder Agreement. If there is a Change of Control and the new control
Slide 37: Foreign Jurisdictions
Foreign Jurisdictions For personal use only This document does not constitute an offer of Shares of AJL in any jurisdiction in which it would be unlawful. Offer Shares may not be offered or sold in any country outside Australia except to the extent permitted below. New Zealand This document has not
Slide 38: Foreign Jurisdictions
Foreign Jurisdictions For personal use only Hong Kong (cont.) No advertisement, invitation or document relating to the Offer Shares has been or will be issued, or has been or will be in the possession of any person for the purpose of issue, in Hong Kong or elsewhere that is directed at, or the conte
Slide 39: Foreign Jurisdictions
Foreign Jurisdictions For personal use only No US offer This document does not constitute an offer to sell, or a solicitation of an offer to buy, any securities in the United States. The Offer Shares have not been, and none of them will be, registered under the US Securities Act of 1933 (the “US Sec
Slide 40: Glossary
Glossary For personal use only Term Meaning $ Australian dollars unless otherwise stated (converted at GBP1:AUD1.6189 as at 6 June 2013, where applicable) AJL AJ Lucas Group Limited Bolney An oil and gas project operated by Cuadrilla and located in the Weald Basin, West Sussex, England on the Bolney