In order to pay for the loan notes San Leon said it plans to raise at least US$200mln through a placing of shares. It is envisaged that the new shares will be sold at 105p, a 261% premium to its price prior to suspension on AIM in January.
Toscafund is expected to be among the participating investors, and San Leon told investors that its preliminary talks with other institutions had been “very positive”.
Whitman Howard and Brandon Hill Capital have been retained to act as brokers for the placing.
As part of the pitch to investors, San Leon is promising a new five year dividend policy.
Given that San Leon was valued in the market at around £18mln prior to its suspension earlier this year, the equity funding will take the form of a reverse takeover (and as such previous shareholders will see dilution).
The AIM-listed oiler wants to acquire high interest loan notes that enabled the takeover of Mart Resources, and the arrangement is supported by major shareholder Toscafund.
San Leon Energy Plc (LON:SLE) is set to have a more direct role in the Nigerian oil deal which saw the buy-out of Mart Resources in April.
Toscafund, San Leon's major shareholder with 41%, funded the initial US$73mln payment for the Mart acquisition by subscribing for loan notes in a newly created takeover vehicle.
A second tranche of loan notes, amounting to US$100mln, is also planned and those funds will enable the completion of the full transaction.
It is now proposed, however, that San Leon will acquire all US$173mln of notes from Toscafund, subject to the company raising US$200mln through a new share placing.
As a result, San Leon will have security over the acquired assets and it will receive income from the notes (they pay 17% per year and mature in March 2020).
San Leon will, as was previously planned, still receive just shy of 10% indirect interest in the OML 18 operations which have produced at a rate of 50,000 barrels of oil per day - and could be expanded to 100,000 bopd.
The AIM quoted company also expects to generate revenues through the provision of oil field services to the Nigerian operator.
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