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Igas Shares Dive As Restructuring Set To Dilute Existing Shareholders (ALLISS)

Wed, 1st Mar 2017 10:30


LONDON (Alliance News) - Igas Energy PLC on Wednesday said it has progressed talks with a strategic investor that started late last year in regards to the company's efforts to restructure its capital, sending shares down after the potential deal was outlined.

Igas shares were down 26% on Wednesday at 6.39 pence per share.

Igas said the potential deal would involve Kerogen Capital investing USD35.0 million into the company, subject to Igas restructuring its secured and unsecured bonds, resulting in a new capital structure for the business.

In addition, Igas said it would raise additional equity, with existing shareholders allowed to participate. That placing would be expected to be priced at 4.5p per share, the company said.

"The company believes that the new capital structure would be sustainable in the current oil price environment and would enable IGas to capitalise on value accretive opportunities whilst also maintaining its valuable carry agreements, for the benefit of all stakeholders," Igas said.

"The potential transaction would be subject to a number of approvals, including shareholder approvals and secured and unsecured bondholder approvals as well as final approval by the strategic investor," Igas added.

Igas conceded that the deal would result in a significant reduction in gross outstanding debt but also a significant dilution of the existing shareholders, the "precise extent of which will depend on a range of factors".

Currently, Igas envisages the USD125.6 million of current outstanding secured bonds to be restructured through the partial repurchase of those bonds in cash, a partial conversion into equity, with the remaining balance to be exchanged into new secured bonds with amended commercial terms and extended maturity.

The USD27.4 million of outstanding unsecured bonds would be fully converted into equity.

Most of the bonds are owned by third parties, but Igas said it will cancel the bonds outstanding that it already owns, a total of USD10.2 million in secured bonds and USD2.6 million in unsecured bonds.

Igas said it has significant cash in the bank of USD31.8 million in addition to a carried work programme worth USD230.0 million. Production is forecast to rise this year to a range of 2,500 barrels daily from the 2,355 barrels produced daily in 2016.

"Upon completion of the potential transaction, we would have a capital structure that we believe is sustainable in the current oil price environment and that will enable the company to capitalise on value accretive opportunities. We look forward to working with Kerogen Capital and our existing stakeholders to finalise the terms of the potential transaction," said Chief Executive Stephen Bowler.

By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance

Copyright 2017 Alliance News Limited. All Rights Reserved. 

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