LONDON (Alliance News) - Independent Resources PLC on Friday said it has begun to seek shareholder approval for a reorganisation of its share capital, a move which could pave the way for the company to raise equity funding.
In a statement, the AIM-listed oil and as company said it wants to reduce the par value of its shares to 0.01 pence, as the current nominal value is 0.10p and the shares closed at 0.14p on Thursday. Under English law, companies are unable to issue shares at below their nominal value, and Independent Resources thinks it could be "challenging" to raise new equity funds at a minimum subscription price of 0.1p or more. In addition, the company wants authority for the disapplication of statutory pre-emption rights for the issuance of new ordinary shares.
Shares in the company were down 15% at 0.119p on Friday.
"The company has identified an opportunity to raise additional equity but the potential providers of this finance have indicated that they would not be prepared to provide this funding if it were contingent on subsequent approval of shareholders in general meeting," Independent Resources said in a statement.
"The directors believe that, in the current difficult environment, this represents a significant opportunity to capitalise the company at an appropriate level, whilst bearing in mind the competing demands of shareholder dilution and the requirement for future certainty in relation to the company's funding," Independent Resources said.
In addition, the company is evaluating opportunities to invest in producing fields, and said it is conducting due diligence on an opportunity in in the Republic of Georgia.
The company is seeking approval to take a "significant statutory authority" to issue up to 5.00 billion new shares for cash, equivalent to 12 times its shares in issue, free of statutory pre-emption rights that they must first be offered to existing shareholders.
"The directors recognise that the magnitude of the authority being sought is significantly greater than might typically be sought from shareholders.
"However," Independent Resources said, "the requirements of the company's potential equity funders as well as the need to raise additional capital in as short a period as possible necessitate the company having sufficient shareholder authorities in place."
A shareholder meeting is scheduled for April 25 in London.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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