LONDON (Alliance News) - Fastnet Oil and Gas PLC shares rose on Tuesday after it announced plans for a complete change in direction for the business, proposing to become an investment company in the heathcare sector.
Fastnet shares were up 4.9% to 2.12 pence per share on Tuesday afternoon.
Fastnet, which currently has oil and gas exploration assets offshore Morocco and Ireland, said it wants to change its name to Fastnet Equity PLC and turn its attention to the healthcare sector, focused on Europe, due to the downturn in the oil and gas industry.
Shareholders will vote on the proposed changes at a meeting to be held on August 28.
"In light of the current economic climate within the oil and gas sector, the board has determined that it is not in the best interests of shareholders to either pursue merger and acquisition opportunities in that sector or to expend further resources on the company's existing oil and gas assets," it said in a statement.
"The board believes that the healthcare industry, particularly the biopharma sector, is experiencing strong momentum and there exist significant M&A and value creation opportunities for both small cap and large cap companies. Furthermore the board believes that it has access to an international pipeline of such opportunities that could lead to value creation for the shareholders," it added.
In terms of the company's existing assets, the Foum Assaka Licence offshore Morocco is costing the company around USD25,000 a month to maintain. The board has therefore, subject to the new investing policy being approved, decided to withdraw from the partnership and surrender its 12.5% stake.
If it does surrender its stake, it will still have to pay the monthly USD25,000 up until September 30, and possible further costs related to the license which in total, should not exceed USD150,000, it said.
Fastnet also will seek to dispose of its licenses offshore Ireland. At the end of July, expenditure on those licenses totalled USD600,000, and Fastnet says the outstanding costs before it gets rid of the licenses should not exceed a further USD150,000.
At the end of July, Fastnet had a cash balance of USD15.9 million and liabilities totalled USD600,000.
If the proposed changes are approved by shareholders, the company will become an investment company under AIM rules, and it will have 12 months to make an acquisition.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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