(Alliance News) - Nu-Oil & Gas PLC said Wednesday it has undergone a debt restructuring, sold a joint venture asset, and raised GBP500,000 through a placing.
Shares in the hydrocarbon explorer were down 17% in London in mid-morning trade to 0.052p each.
Nu-Oil said Shard Capital Management informed the hydrocarbon explorer it has sold the loan owed to Shard by Nu-Oil to C4 Energy Ltd - who as a result will become the company's largest debt holder.
Following the debt sale, Nu-Oil granted C4 loan notes of GBP10,000, setting the company's loan balance at GBP2.5 million. The loan notes are unsecured, interest free with a five-year term, with repayment due at the end of term.
The loan note will have share conversion rights - assuming shareholder approval at an upcoming general meeting. The notes will hold conversion rights at the option of the lender at any time, at a price of 0.05 pence. Nu-Oil said C4 has agreed, following any potential conversion, to cap its interest in Nu-Oil at 29.9%.
The new balance for the C4 loan was agreed after Nu-Oil borrowed GBP1.0 million from Shard for 12 months, with a 20% interest rate, back in November 2013. Then in December of 2014, Nu-Oil obtained a further GBP250,000 loan from Shard. With accrued interest, the loan stood at GBP2.2 million at the end of September 2019.
"In order to secure favourable commercial terms and given the proposed provision of short-term finance as set out below, the directors of the company have agreed to set the final balance owed at GBP2.5 million," Nu-Oil said.
As part of the debt restructuring, Nu-Oil has upended its board.
C4 shareholders Jay Bhattacherjee and Andrew Dennan have been appointed non-executive chair elect and non-executive director, respectively. Executive Chair Graham Scotton will become non-executive chair for now.
Bhattacherjee and Dennan will be issued five-year options to subscribe for 90 million new shares at 0.0625p per share.
Joint Managing Director & Chief Financial Officer Damian Minty and Joint Managing Director Alison Pegram have agreed to resign their roles and are standing down from the board, effective immediately. Non-Executive Directors Michael Bowman and Tejvinder Minhas also have both resigned, effective immediately.
Nu-Oil also has agreed to raise GBP500,000 through the issue of 1.00 billion new shares. The new shares will be priced at the same 0.05p. The net proceeds of the placing will be used for short term general working capital purposes, Nu-Oil said.
The placing is subject to shareholder approval, but Nu-Oil stated that if the placing was not approved, the company "would have to seek alternative financing immediately".
"In the event that such financing was not available then the company would be put into administration," Nu-Oil added.
Finally, Nu-Oil said it has sold its 50% stake in Marginal Field Development Co Ltd to RMRI Ltd, giving RMRI a 100% stake.
The sale will be settled through the release of all outstanding debt due to RMRI, which totals GBP1.2 million.
Under AIM rules, the sale is considered a "fundamental disposal", so requires shareholder approval. The sale will see Nu-Oil become a cash shell and will have six months to complete a reverse takeover or be de-listed from AIM.
The general meeting to approve the debt restructuring, board changes, placing and Marginal Field Development sale will be held "as soon as practical", Nu-Oil said.
By Paul McGowan; paulmcgowan@alliancenews.com
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