LONDON (Alliance News) - Independent Oil and Gas Friday said the "internationally listed group" that was set to inject USD10 million of equity funding into the company and provide a large debt facility has pulled out "due to the renewed fall in commodity prices".
The collapse of the deal leaves the company less than a month to find an alternative funding deal before it has to repay its loan and could place its acquisition of a stake in the Skipper license offshore the Shetland Islands at risk.
Independent Oil was trying to secure a long-term financing deal in June which was set to be split between equity and debt funding from an unnamed potential funder which it called "an internationally listed group with a multi-billion dollar market capitalisation".
The funder was expected to inject the funding by subscribing for 30 million shares in the company at 23.79 pence per share to take a 29.9% equity stake in Independent Oil, whilst in tandem providing the company with a "attractively priced" related debt facility worth USD480 million.
Those deals were being conducted so Independent Oil could fund the acquisition of a 50% stake in the Skipper license offshore the Shetland Islands and to provide the funding required to participate in the work programme.
Shareholders approved the deal at an extraordinary general meeting last Friday.
On Friday, Independent Oil said: "Unexpectedly, the investor has advised us today that due to the renewed fall in commodity prices they have decided not to proceed with the investment at this stage."
"The short term priority is to secure the funding for the Skipper commitment well which is necessary to secure a licence extension for Skipper and also to close the acquisition of 50% of Skipper from our partner in the licence, Alpha Petroleum," it added.
However, the company claims it has kept a number of other options open which it is now chasing and said the collapse of the deal is not a reflection of the company.
"Whilst we anticipated that the transaction was likely to conclude, we have continued to keep other opportunities open. We are now pursuing these opportunities with the aim of maximising value to shareholders," said Chief Executive Mark Routh.
"The decision from our potential investor is unexpected based on the progress made to date and clearly very disappointing. It is a decision based on external factors and not a reflection on our team and assets," he added.
The company said it is only funded up to September 4, when it must repay its GBP358,000 loan from Darwin Strategic.
Independent Oil and Gas shares closed down 10.9% to 11.70 pence per share on Friday.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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