LONDON (Alliance News) - New World Oil and Gas PLC on Thursday announced a new share placing and open offer to raise up to GBP3.5 million, funds the oil investment firm said it needs to continue operating longer than another three months as it currently has only GBP290,000 in cash.
New World had said on Monday it was still expecting to proceed with an open offer and placing, after an earlier GBP1.5 million placing was rejected by shareholders at a May extraordinary general meeting. That placing had been plagued by confusion over the size of shareholdings in the company, including those of Judith Williams and her son, and of fellow-listed Metal Tiger PLC.
The new offer, made on the basis of 5.534 new shares for each one existing share, will see the issue of up to 3.89 billion shares at a price of 0.09 pence, a 65% discount to New World's closing price on May 18, the last day prior to the stock's suspension, but only a 5.3% discount to its price on April 28, the last day before the announcement of the original placing.
New World currently has over 702.7 million shares in issue, meaning it will be enlarging its share capital by around 5.5 times its current size. The 0.09 pence price is also considerably higher than the 0.055p price that was proposed for the placing that was rejected at the extraordinary general meeting in May, which would have resulted in only 2.73 billion shares being issued.
"Whilst the company has previously announced its intention to make an open offer at 0.055 pence, being the price of the original placing, the board has in the light of events reconsidered what would be an appropriate price for the placing and open offer," said New World.
"In particular, they have reconsidered one which balances the company's need for funds and the need to have an equity fundraising pre-placed at an advantageous price for the company against one which gives eligible shareholders the opportunity of subscribing for ordinary shares at what they might consider an attractive price," the company added.
New World said the number of shares available under the open offer has increased due to the ongoing issues surrounding the stake that certain shareholders hold, which was caused by the original placing being rejected in May. The London Stock Exchange suspended New World shares in May due to "delays in the settlement of transactions in the shares of New World Oil". The LSE said it also was "monitoring the settlement situation in this security which has continued to deteriorate".
"Given the uncertainty as to the full extent of the settlement problems in the ordinary shares, the board has resolved to make the open offer as large as it can without the need for publishing a prospectus, which would be impractical in the circumstances," New World said Thursday.
The confusion related to the company's shareholding came after the conditional placing was launched in April, when New World said Judith Williams, a new investor, had purchased over 342.3 million shares in the company, which caused the company to look into William's acquisition of shares, including whether there were any regulatory implications and what her intention was.
The company had said it was unsure what size of stake Williams held as it was unclear whether it would be based on the original share capital or the enlarged issued share capital following the placing, which was then rejected by shareholders.
Before and after the EGM, New World had said that Williams held different size stakes in the company, varying from 24.63% to 35.63%, but that she had not received all the shares purchased, which sparked the confusion and prompted the LSE to take action.
The size of Williams' stake in New World Oil still remains an issue and unclear, and is unlikely to be resolved until the open offer has been completed. There is the same problem with Metal Tiger's stake in New World, as Metal Tiger had said it only received a fraction of the shares that it had purchased.
Metal Tiger said in May that it was taking steps to protect its investment in New World Oil following the ongoing issues. Metal Tiger said it had purchased just under 47.1 million New World shares for a total consideration of GBP31,526 which gave Metal Tiger a 6.7% stake in New World. However, Metal Tiger then sold 28.7 million New World shares over the course of May 8 and May 11 to generate gross proceeds of GBP169,891.
At the time of the sale, Metal Tiger said all of the 47.1 million shares acquired should have been settled and been delivered in accordance with the written contract notes, but said a week later it it had only received a fraction of the shares.
Only 2.9 million of the 47.1 million shares, or 6.2% of the shares acquired, have been delivered to Metal Tiger's retail broking account, meaning of the GBP169,891 generated from the sale of shares in May, only GBP17,243 has been released to Metal Tiger, reflecting the proportion of stock delivered and settled on the company's retail stockbroking account.
New World's turmoil continues, as it released a statement on Monday after it said it had received a document notifying it of a group of shareholders led by Mathew Benjamin Turney, who is known for writing for website shareprophets.com, wanted to requisition a meeting to propose a change of direction for the company. According to the notification from the shareholders, Turney and other shareholders control 5.91% of the voting rights in New World Oil & Gas.
"The concerted action to be undertaken by this group is the recruitment of additional members in order to cross the 10% threshold. Thereafter to requisition a meeting to propose a change of direction for the company," the document said.
New World Oil said on Monday: "In light of recent uncertainty regarding, and the continuing suspension of, trading in the company's shares, the board will be monitoring its shareholder register with a view to seeking to confirm if the persons named in this notification appear on that register, and may make a further announcement in due course."
New World Oil & Gas also issued a "cautionary statement" on Monday. "Given the continuance of commentary on unauthorised and unregulated websites, investors and shareholders are warned to exercise caution in dealing in the company's shares and if in any doubt seek the advice of a person duly authorised and regulated by the Financial Conduct Authority," the company said.
In announcing the new open offer and placing on Thursday, the company said: "The past two-year period has been a difficult time for the company. The unsuccessful drilling program in Belize was a major disappointment for the company and the shareholders, as was the failure by Niel Petroleum to complete its equity investment and the failure to complete the Al Maraam SPA."
In 2014, New World signed a sales and purchase agreement with shareholders of Al-Maraam Al-Ahliya Co for General Trading and Contracting LLC to take a 49% shareholder with a 60% economic interest in Al-Maraam for an initial payment of EUR1.0 million.
That deal fell through despite the initial payment being made to Al-Maraam. New World said it is "hopeful" of recovering the funds from Al-Maraam, but said it will consider other alternatives if it can not recover the EUR1.0 million.
"The board...believes that the placing and open offer is in the best interests of the company and the shareholders as a whole, in order to allow the company to raise funds to enable it to maintain its current operations and pursue its future plans," New World said Thursday.
"Significant costs and management time have been, and continue to be, expended on dealing with issues surrounding the EGM, trading issues relating to the ordinary shares, considering the settlement issues relating to the ordinary shares and in arranging the placing and open offer," it added.
New World said if the placing and open offer does not succeed in addressing the ongoing issues surrounding the settlement of shares, it has agreed with its broker, Cornhill Capital, "to take such reasonable steps as they may agree, acting in good faith, to be required in order to deal with such settlement issues."
"Such steps may, as a last resort, include an issue of new ordinary shares for non-cash consideration utilising a cash box placing, which would neither require the consent of shareholders nor be on a pre-emptive basis," it added.
A cash box placing does not need shareholder approval so long as the shares are are issued for a non-cash consideration, such as for the shares of another company.
Shares in New World remain suspended.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
Copyright 2015 Alliance News Limited. All Rights Reserved.
