TXO (AIM: TXO),the East Texas based independent oil and gas exploration and production company, announces that today it has posted a Notice of General Meeting ('GM') along with the Notice of Annual General Meeting ('AGM') to Shareholders.
Reasons for General Meeting
Trading in the Company's Ordinary Shares was suspended on AIM on 13 September 2010 as it was unlikely that the Company would be in a position to publish Annual Accounts by the required date under the AIM Rules of 30 September 2010. Given the likelihood of such suspension, the Company took the opportunity of extending its accounting reference date to 30 September and therefore the next Annual Accounts will be for the 18 month period ended 30 September 2010 (the 'Accounts').
The Company has suffered from mounting operating costs which, combined with reducing oil revenues due to reducing production caused by the lack of funds to maintain oil wells, has placed the Group in a negative cashflow position. The Group has, therefore, only been able to continue to operate with the financial support of MC Productions Inc, the operator of its oil well interests, which maintains a first charge over the Group's oil well assets amounting to $2.9m.
Over the last year, the Group has held many discussions with a great number of parties with a view to finding a funding solution and/or injecting assets. Most of these discussions have proved unworkable but the Company has now been approached by a group which is prepared to put up the finance necessary to have the Accounts prepared as a prelude to arranging a more substantial refinancing of the Group. The Board is firmly of the view that this is the last chance that the Company has to have its Accounts published by the deadline of 13 March 2011, being the date the trading facility for its Ordinary Shares on AIM will be cancelled if the Accounts are not published and the suspension of trading lifted by that date.
The new third party funder is proposing an initial issue of a convertible loan note, convertible into Ordinary Shares at the price of 0.5p per Ordinary Share to provide funding of up to £50,000 to deal with immediate and pressing creditors in order to have the Accounts prepared and audited. This party is also prepared to underwrite the legal and accountancy costs involved. To enable the Accounts to be issued with an unqualified audit report it is envisaged that there will then be a funding of up to £1,000,000 (the 'Funding') through the issue of new Ordinary Shares (the 'New Ordinary Shares'). Given the fragile financial position of the Group and the uncertain future it is considered neither practical nor appropriate to seek this funding by means of a general offer to all Shareholders.
To enable the Funding and the other matters set out above to progress, the Company intends to increase Directors' authority to issue New Ordinary Shares on a non-pre-emptive basis (the 'Proposals').
Annual General Meeting
Along with the Notice of General Meeting the Company has also posted a Notice of Annual General Meeting to Shareholders dealing with the re-election of Directors and re-appointed of the auditors.
The Board has sent out a Circular containing the Annual General Meeting of the Company to be held on 10 March 2011 at 11.00 am (AGM) to consider the resolutions set out in the notice of the Annual General Meeting (AGM Notice) and a General Meeting to be held on 10 March 2011 immediately following the AGM at which the Proposals will be considered and Shareholders will be asked to approve the resolutions set out in the notice of the General Meeting.
A copy of the Circular and Notices is available from the Company's website, www.txoplc.com.
For further information, please contact:
Andrew Glendinning, Finance Director +44 (0)775 130 5056
Beaumont Cornish Limited
Roland Cornish 020 7628 3396
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