LONDON (Alliance News) - Cabot Energy PLC said Tuesday that it will raise GBP2.9 million via a sharply discounted share subscription and open offer and will separately undertake a 1-for-100 share consolidation.
Shares in Cabot Energy were trading 50% lower at 0.25 pence each, one of the worst performers on AIM on Tuesday.
The Canada focused oil and gas company has raised GBP2.1 million pursuant to a share subscription at 10 pence per share. Furthermore, it intends to raise up to GBP770,000 via the issue of up to 7.7 million new shares in an open offer at the same price.
The issue price per share is adjusted to take account of the proposed 1-for-100 share consolidation, meaning it is the equivalent of 0.10p currently and represents a discount of around 80% to the company's closing price on Monday of 0.50p each.
Existing shareholder High Power Petroleum LLC has bought the majority of the subscription shares, while another shareholder City Financial Investment Co Ltd has subscribed for the remaining shares.
Cabot intends to use the proceeds to partially settle outstanding balances with trade creditors in Canada and the UK and for short-term working capital purposes.
"The proposals outlined today deliver the short-term capital required to safeguard Cabot Energy's future. It follows a forensic assessment of the company's financial position and consideration of all available options, including asset sales, and what is being recommended by the board we believe is in the best interest of all shareholders. The funds will enable the company to deliver on its creditor settlement agreements and provide a platform for the growth financing plan by the end of Q1 2019," said Interim Non-Executive Chairman James Dewar.
Cabot said it would have many more shares than similar-sized companies on AIM market after the new issuance. As a result, it will undertake the share capital reorganisation. The company currently has 661.9 million shares.
The company has called a general meeting on March 1 to seek shareholder for its fundraise and share capital reorganisation.
