LONDON (Alliance News) - Frontier Resources International PLC said Friday it has raised GBP1.4 million through a subscription for 4.75 billion shares at a placing price of 0.03 pence per share, as it outlined plans to sell its current oil exploration ventures and invest in new projects.
Shares in Frontier Resources were up 50% at 0.0901 pence Friday morning.
The proceeds of the subscription will be used for working capital and to support investment in new projects. Frontier Resources said it does not plan to provide any further capital to its existing exploration projects, and it plans to consider the future of this projects following the completion of the subscription.
The company said it has urgently needed to arrange additional funding for its immediate requirements over the last six months. It cited "very challenging" conditions for oil companies, with volatility in financial markets and the steep decline in oil prices. As a result it has been "exceptionally difficult" for the company to progress any farm-out discussions, and it has not been able to secure a farm-out partner on credible terms for any of its oil exploration projects.
Frontier Resources does not believe there is "any immediate prospect of a material improvement in market conditions in the oil sector or investor sentiment", and as such has decided to pursue alternative options, including selling its existing oil exploration projects and investing in new projects outside of the sector.
The subscription price is a 57.1% discount to the company's closing mid-market price Wednesday, and values the company's existing ordinary share capital at around GBP108,600. This discount reflects the company's current financial position, it said.
Frontier Resources also outlined a number of proposed changes to its board to support its shift in direction, including appointing Adam Reynolds as Chairman with immediate effect. On completion of the subscription Jack Keyes and John O'Donovan will both cease to be directors of Frontier with immediate effect.
Director Neil Herbet has subscribed for 333 million shares in the company at the subscription price, taking his interest in the company to 3.39%.
In an effort to provide shareholders with "some ability to subscribe" on similar terms, Frontier Resources has proposed to issue new warrants to shareholders on a basis of one warrant for every share held. The exercise price of these warrants will be at the same price as the subscription.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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