February 9, 2018

Receipt of US$3 million Loan Director holding and update of irrevocable undertaking

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR FROM THE UNITED STATES OF AMERICA, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR AUSTRALIA, OR IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION. SEE THE IMPORTANT NOTICE AT THE END OF THIS ANNOUNCEMENT.

THIS ANNOUNCEMENT IS NOT AN ANNOUNCEMENT OF A FIRM INTENTION TO MAKE AN OFFER UNDER RULE 2.7 OF THE CODE AND THERE CAN BE NO CERTAINTY THAT ANY OFFER WILL BE MADE EVEN IF THE PRE-CONDITIONS ARE SATISFIED OR WAIVED.

THIS ANNOUNCEMENT CONSTITUTES INSIDE INFORMATION AS STIPULATED UNDER THE MARKET ABUSE REGULATION (EU) NO.596/2014 AND HAS BEEN ARRANGED FOR RELEASE BY KARL SMITHSON, CHIEF EXECUTIVE OFFICER OF THE COMPANY.

9February 2018

Stellar Diamonds plc (“Stellar” or the “Company”)

Receipt of US$3 million Loan

Director holding and update of irrevocable undertaking

AIM: STEL

Further to the announcement on 1 February 2018 (“Possible Offer Announcement”), the Board of Stellar announces that the Company has received the unsecured US$3 million loan from Newfield Resources Limited (“NWF”). The loan will be used for, inter alia, commencement of work on the Front End Engineering Design stage of the mine plan for the Tongo-Tonguma project and mine plan drilling.

The Company also announces that it has been advised by Peter Daresbury, Non-Executive Chairman of the Company, that the number of shares in which Peter Daresbury is beneficially interested is 2,033,827. This figure replaces the holding of 2,036,643 which has been historically stated and which was included in the Possible Offer Announcement. Peter Daresbury’s holding as a percentage of the issued share capital of the Company is unchanged at 3.28%. The difference of 2,816 ordinary shares is believed to have arisen as a result of shares held by family Trusts (in which Peter Daresbury is not beneficially interested) having historically been included in the calculation of Peter Daresbury’s beneficial holding.

As a consequence of the restatement of Peter Daresbury’s shareholding, an updated irrevocable undertaking in favour of the Possible Offer (as such term is defined in the Possible Offer Announcement) has been entered into by Peter Daresbury in respect of his updated holding of 2,033,827 ordinary shares (“New Irrevocable Undertaking”). This New Irrevocable Undertaking replaces the undertaking detailed in the Possible Offer Announcement however the terms of the New Irrevocable Undertaking are unchanged from those stated in the Possible Offer Announcement.

It remains unchanged that NWF has at this time received support for the Possible Offer from Stellar shareholders (including the Directors of Stellar) representing, in aggregate, 29.80% of Stellar’s issued share capital. Full details of irrevocable undertakings are set out in Schedule 1 of this announcement.

Whilst the negotiations with NWF are very advanced at this stage and this announcement has been made with the approval of NWF, there can be no certainty that any offer will be made for the Company nor as to the final terms of any offer. The Conditions of the Possible Offer remain unchanged as set out in the Possible Offer Announcement.

 

 

Enquiries:

Karl Smithson, CEO Stellar Diamonds plc Tel: +44 (0) 20 7010 7686
Emma Earl

Sandy Jamieson

Cairn Financial Advisers (Nominated Adviser and Rule 3 Adviser to Stellar) Tel: +44 (0) 20 7213 0880

Cairn Financial Advisers LLP, which is authorised and regulated by the Financial Conduct Authority, is acting for the Company as financial adviser in relation to the possible offer for the Company and is not acting for any other person in relation to such possible offer for the Company. Cairn Financial Advisers LLP will not be responsible to anyone other than Company for providing the protections afforded to its clients or for providing advice in relation to the contents of this document or any possible offer for the Company or arrangement referred to herein.

The Directors of the Company accept responsibility for the information contained in this announcement and, to the best of their knowledge and belief (having taken all reasonable care to ensure that such is the case) the information contained in this announcement is in accordance with the facts and does not omit anything likely to affect the import of such information.

 

Important notice

This announcement is not intended to, and does not, constitute or form part of any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities whether pursuant to this announcement or otherwise. This announcement does not constitute a prospectus or a prospectus equivalent document. The shareholders of Stellar and NWF are advised to read carefully the formal documentation in relation to the Possible Offer once it has been despatched.

Overseas jurisdictions

The release, publication or distribution of this announcement in jurisdictions other than the United Kingdom may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the United Kingdom should inform themselves about, and observe any applicable requirements. This announcement has been prepared for the purposes of complying with English law and the Code and the information disclosed in this announcement may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws of jurisdictions outside the United Kingdom.

This announcement is not for publication or distribution, directly or indirectly, in or into the United States of America. This announcement is not an offer of securities for sale into the United States. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1993, as amended, and may not be offered or sold in the United States, except pursuant to an applicable exemption from registration. No public offering of securities is being made in the United States.


Dealing disclosure requirements of the Takeover Code (the “Code”):

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any paper offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified.

An Opening Position Disclosure must contain details of the person’s interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) of the Code applies must be made by no later than 3.30 p.m. (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 p.m. (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchanger offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person’s interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror, save to the extent that these details have previously been disclosed under Rule 8 of the Code. A Dealing Disclosure by a person to whom Rule 8.3(b) of the Code applies must be made by no later than 3.30 p.m. (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3 of the Code.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4 of the Code).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel’s website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel’s Market Surveillance Unit on +44 (0) 20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Publication on Website

A copy of this announcement will be made available (subject to certain restrictions relating to persons resident in restricted jurisdictions) at www.Stellar-diamonds.com in accordance with Rule 26.1 of the Code by no later than 12 noon (London time) on 2 February 2018. The content of the website referred to in this announcement is not incorporated into and does not form part of this announcement.

Schedule 1 – Irrevocable Undertakings

In accordance with Rule 2.10 of the Code, the Company announces that Deutsche Balaton AG has entered into a binding irrevocable undertaking in favour of NWF in respect of its shareholding of 8,547,692 ordinary shares in Stellar (representing approximately 13.78% of the current issued share capital of Stellar) to vote in favour of or accept an offer which is made by NWF substantially on the terms set out in this announcement.

NWF has also received a binding irrevocable undertakings from Creditforce Limited in favour of NWF in respect of its shareholding of 3,293,914 ordinary shares in Stellar (representing approximately 5.31% of the current issued share capital of Stellar) to vote in favour of or accept an offer which is made by NWF substantially on the terms set out in this announcement.

NWF has also received binding irrevocable undertakings from each of the Directors of the Company and the Chief Operating Officer Rowan Carr to vote in favour of or accept an offer which is made by NWF substantially on the terms set out in this announcement in respect of their aggregate shareholdings of 6,634,022 ordinary shares representing approximately 10.70% of the share capital of the current issued share capital of Stellar.

The irrevocable undertakings from Deutsche Balaton AG, Creditforce Limited, each of the Directors and Rowan Carr will cease to be binding if, among other things:

i. the Company’s Board does not recommend the Possible Offer;

ii. Prior to an announcement of a firm intention to make an offer, NWF does not make the proposals in respect of the options, warrants and convertible loans as set out in this announcement;

iii. the relevant offer or scheme documentation is not posted to shareholders of the Company within the permitted period under the Code or as otherwise agreed with the Panel;

iv. the takeover offer (or scheme of arrangement as applicable) does not become effective, is withdrawn or lapses in accordance with its terms;

v. the Directors of the Company withdraw their recommendation in support of an offer which may be made by NWF;

Further details on the holdings and interests in relevant securities of parties giving irrevocable undertakings are set out in the table below. It is intended that the convertible loan notes and accrued interest will be repaid by NWF in the event of completion of the Possible Offer. The convertible loan note holders have agreed, pursuant to the terms of the irrevocable undertakings, that they will not seek to convert their loan notes or exercise their warrants into Ordinary Shares of the Company whilst the terms of the irrevocable undertakings remain binding. The Directors and Rowan Carr have also agreed that they will not seek to exercise their share options into Ordinary Shares of the Company whilst the terms of the irrevocable undertakings remain binding.

Name of Stellar shareholder who has provided an irrevocable Number of Stellar shares over which undertaking is given Percentage of Stellar issued share capital as at 31 January 2018 Rights over ordinary shares of Stellar in respect of convertible loan notes, warrants or options (based on an exchange rate of US$1.41: £1.00)
Deutsche Balaton AG 8,547,692 13.78% Convertible loan note principle outstanding:

· US$1,650,000 (CLN1)

· US$293,345(CLN2)

Warrants with an exercise price of US$2,475,000 in aggregate, exerciseable at a price of 5 pence per ordinary share into 35,106,383 ordinary shares1.

Warrants with an exercise price of US$880,035 in aggregate, exerciseable at a price of 5 pence per ordinary share into 12,482,766 ordinary shares1.

In addition to the above, Deutsche Balaton is entitled to be issued 14,184,397 Ordinary Shares in Stellar (being shares with an aggregate value of US$1.0 million issued at 5 pence per share).2

Creditforce 3,293,914 5.31% Convertible loan note principle outstanding:

US$450,000

Warrants with an exercise price of US$1,350,000 in aggregate with an exercise price of 5 pence per ordinary share into 19,148,936 ordinary shares. 1

Peter Daresbury 2,033,827 3.28% Nil
Karl Smithson 1,526,486 2.46% Options over 1,850,000 Ordinary Shares
Steven Poulton 1,456,745 2.35% Options over 750,000 Ordinary

Convertible loan note principle outstanding:

US$598,838

Warrants with an exercise price of US$1,796,514 in aggregate with an exercise price of 5 pence per ordinary share into 25,482,468 ordinary shares. 1

Hansjörg Plaggemars 587,862 0.95% Options over 750,000 Ordinary Shares
Rowan Carr 1,029,102 1.66% Options over 1,250,000 Ordinary Shares

 

1The rights held by warrant holders includes warrants over 92,220,553 ordinary shares which are associated with the Company’s convertible loan notes. The number of these warrants has been calculated based on the aggregate exercise price of the warrants of US$2.475 million and US$4 million with the exercise price being assumed to be, for the purpose of the Possible Offer by Newfield Resources Ltd, 5 pence per share and using an exchange rate of US$1.41 to £1.00. The warrant exercise price may vary in accordance with the terms of the loan note agreements (which are summarised in the Company’s previous announcements, notably the announcements of 14 August 2017 and 11 September 2017 (“CLN Announcements”)) in the event that the Possible Offer does not proceed. Warrants in respect of 227,719 ordinary shares are exercisable at a price of 7.125 pence.

2 pursuant to an agreement entered into with the Company on 6 October 2016 (as subsequently amended) whereby Deutsche Balaton conditionally agreed to waive certain of its rights under CLN1 relating to its ability to convert/and or exercise its loan note and warrants respectively into shares in a subsidiary of the Company.

The Irrevocable Undertakings given to NWF represent total shareholdings of approximately 29.80% in Stellar to vote in favour of, or accept, any recommended offer which is made by NWF substantially on the terms set out in this announcement.

The Irrevocable Undertakings above remain binding in the event of a higher, or any other, bid or offer for Stellar subject to the Board of Stellar not withdrawing their recommendation.