19 March 2020
Sound Energy plc
("Sound Energy" or the "Company")
Further re Directorate Changes
Sound Energy, the Moroccan focused upstream gas company, announces the following information further to the Company's notifications of 12 November 2019 and 20 January 2020 (the "Previous Notifications"). The Previous Notifications described the resignations of James Parsons, the Company's former Chief Executive Officer, and Brian Mitchener, the Company's Exploration Director, respectively.
James Parsons ceased to be a director of the Company on 23 January 2020 and Brian Mitchener remains a director of the Company until 31 March 2020. Both will remain employees of, and available to, Sound Energy for the remainder of the notice periods under their employment contracts ending on 12 May 2020 and 20 May 2020 respectively.
As previously disclosed by the Company, certain of the Company's employees, including James Parsons and Brian Mitchener, are entitled to 'change of control' payments under their employment contracts in the event of that a transaction which constitutes a 'change of control' of the Company completes during the term of their employment.
Under their existing employment contracts, should a transaction which constitutes a 'change of control' event complete during the term of their employment, James Parsons would be entitled to a payment equal to 18 months' salary and Brian Mitchener would be entitled to a payment equal to 8 months' salary (the "Change of Control Clauses"). No payments have been made or triggered under the Change of Control Clauses.
At the times of their resignations, and to seek to incentivise Messrs Parsons and Mitchener to continue to assist the Company in advancing the proposed divestment transaction announced by Sound Energy on 6 November 2019 (the "Proposed Transaction"), the Company determined that it would be appropriate to agree to extend the period for which the executives would be eligible for a payment under their Change of Control Clauses beyond the end dates of their employment such that should the Proposed Transaction, or another 'change of control' event, complete during calendar year 2020, each of James Parsons and Brian Mitchener would be entitled to a payment under their Change of Control Clauses, albeit in a reduced amount of 80 per cent. of their pre-existing contractual entitlements (the "Change of Control Amendments").
The purported Change of Control Amendments were subject to Rule 13 of the AIM Rules for Companies as 'related party transactions'. The Company did not compy with AIM Rule 13 and did not disclose the purported Change of Control Amendments in the Previous Notifications.
Acknowledging the oversight in this regard, and notwithstanding the previous due consideration of the Company's Remuneration Committee in agreeing the purported Change of Control Amendments in November 2019 and January 2020, given the intervening developments with respect to the Proposed Transaction and also the general economic climate, the Company has now concluded that the Change of Control Amendments are not appropriate and James Parsons and Brian Mitchener have, at the Company's request, renounced any entitlement to a payment pursuant to the Change of Control Amendments.
As a result, Messrs Parsons and Mitchener continue to be entitled to 'change of control' payments under their original Change of Control clauses prior to the end dates of their employment (12 May 2020 for James Parsons and 20 May 2020 for Brian Mitchener) but will not be entitled to any 'change of control' payment following the cessation of their employment.
The Company re-iterates that it is no longer in exclusive discussions in respect of the Proposed Transaction and there is no certainty that the Proposed Transaction will proceed or will successfully conclude. The Company does not consider there to be any realistic prospect that the Proposed Transaction (or any other transaction which constitutes a 'change of control' event) will complete prior to the expiry of these executives' employments and thus there is currently no expectation that the Company will be liable under their existing employment contracts to make any related payment to either James Parsons or Brian Mitchener.
For further information please contact:
Vigo Communications - PR Adviser
Tel: 44 (0)20 7390 0230
Cenkos Securities - Nominated Adviser
Tel: 44 (0)20 7397 8900
Turner Pope Investments (TPI) Ltd - Broker
Tel: 44 (0)20 3657 0050