IPSA GROUP PLC - Sale of Blazeway Engineering Limited and Settlement of Certain Major Creditors

Sale of Blazeway Engineering Limited and Settlement of Certain Major Creditors

IPSA GROUP PLC
(Incorporated and registered in England and Wales)
(Registration Number 5496202)
AIM Share Code IPSA ISIN GB00BOCJ3F01
JSE Share Code IPS ISIN GB00BOCJ3F01
("IPSA" or "the Company")


Sale of Blazeway Engineering Limited and Settlement of Certain Major
Creditors

IPSA Group PLC (AIM:IPSA), the developer, owner and operator of power
generation capacity in South Africa, announces that it has agreed to sell Blazeway
Engineering Limited (“Blazeway”) to Sloane Corporation Limited (“SCL”) subject to
the satisfaction of conditions precedent including the approval of the transaction by
the Company’s shareholders. Blazeway is the UK holding company, which owns
Newcastle Cogeneration Proprietary Limited (“NewCogen”), the Company’s
operating subsidiary in South Africa.

Under the terms of the conditional sale and purchase agreement, SCL will provide
total consideration of £1,866,000 in the form of cash of £50,000 and non-cash
consideration which includes the assumption by SCL of the liability to discharge
certain of the Company’s creditors subject to the consent of those creditors. The
£50,000 is payable on execution of the sale and purchase agreement.

In addition to this £50,000 cash payment, SCL has paid £50,000 in satisfaction of
certain of NewCogen’s outstanding liabilities and has agreed to set aside the sum
of £280,000 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.
Drawn down amounts will be converted to a loan to NewCogen in the event that
the sale is not completed.

SCL is wholly owned and operated 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, IPSA’s nominated
adviser, that the terms of the transaction are fair and reasonable insofar as the
shareholders are concerned.

The transaction will also constitute a fundamental disposal under the AIM Rules and
consequently the transaction will be subject to shareholder approval at a general
meeting and a circular to shareholders will be issued shortly. Following the disposal
of NewCogen, IPSA would be regarded as an AIM Rule 15 cash shell, and would be
required to make an acquisition or acquisitions constituting a reverse takeover
under the AIM Rules within 6 months.

A circular convening the general meeting of shareholders in the Company and with
further details of the disposal will be sent to shareholders and notified on by RNS
in due course.
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 before tax of Blazeway was £227,529 and net assets were
negative £2,638,644.

The £50,000 cash proceeds paid to IPSA from the transaction will be used for
working capital whilst IPSA seeks to realise its remaining assets that consist
primarily of the balance of plant associated with the previously sold 701DU turbines
and a receivable from Rurelec PLC.

The Company previously announced that its working capital was extremely tight
and it has been reliant on the forbearance of its creditors with the possibility that
the Company may be put into administration. As a result of the mechanical failure
of one of NewCogen’s gas turbines in November 2015, the working capital and
creditor pressure has deteriorated further. 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 have resulted 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 Energy of approx. £3.2 million the Company will focus its
attention in the near term of seeking to satisfying its remaining creditors from the
sale of the balance of plant and collection of the receivable from Rurelec PLC

The Company’s shares are currently suspended pending the release of its financial
accounts for the year ended 31 March 2015 and for the interim period to 30
September 2015.

Chairman Richard Linnell commented: “The transaction, if completed, will release
IPSA from a significant portion of its outstanding liabilities. This will in turn place
the Company in a stronger position to meet all of its remaining obligations to
creditors – most notably Ethos Energy Italia – out of other asset disposals with any
residual balance for shareholders as IPSA turns itself into a cash shell that will seek
a reverse takeover.”

28 January 2016
                        For further information contact:

  Mark Otto, Acting CEO                               +27 (84) 219 2000
  IPSA Group PLC

  James Joyce / James Bavister                        +44 (0) 20 7220 1666
  W H Ireland Ltd

  Riaan van Heerden,                                  +27 (0) 21 887 9602
  PSG Capital (Pty) Ltd.




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