LONDON (Alliance News) - New World Oil & Gas PLC gave up the fight to retain its listing on AIM on Friday, admitting it has not been able to find a new nominated adviser after the previous one resigned following the failed merger with video content maker Big Sofa Ltd.
It has gone from bad to worse for New World since a shareholder action group successfully overhauled the company's board in the second half of 2015. The company opted to exit the natural resource sector all together, relinquishing licenses and looking for a new area to move into, eventually deciding to merge with video and image analytics business Big Sofa Ltd.
Whilst New World Oil wanted a new business to manage, Big Sofa was willing to merge with New World Oil on the basis that the London-listed company provided GBP500,000 in short-term loans to the business to address its own financial concerns.
There was a lengthy period of little activity during the exit from oil, followed by due diligence work and preparations to start a new era as part of Big Sofa, with New World Oil shareholders backing the merger plans.
However, after the entire loan had been drawn down by Big Sofa and as New World Oil was preparing to raise equity to fund the new enlarged company, a revelation emerged that resulted in the merger with Big Sofa collapsing, New World Oil's nominated adviser resigning and, as of next week, the cancellation of New World Oil shares trading on AIM.
In October, New World revealed that an "issue" had arisen concerning a "transaction previously carried out by the company which may have a material impact on its financial condition" - unwelcome news at a time when money was already thin on the ground.
Big Sofa felt the uncertainty at New World Oil had changed the fundamentals of the deal, and subsequently pulled out of the merger as the entire deal collapsed. The only positive of that was New World Oil's entitlement to recall all of the loans, plus interest, that had been provided to Big Sofa.
New World Oil shareholders on Friday also rejected a proposal put forward by a shareholder for a new independent director, Gary Bullivant, to be appointed to the board as investors had looked to provide extra scrutiny to the proposed reverse takeover of Big Sofa, which collapsed the day before. In a short statement, with no breakdown of voting, New World said the resolution was not passed.
New World was then hit by further bad news as its nominated adviser, Beaumont Cornish, resigned following the "legacy issue" that was identified by the company - with no further light being shed on the matter since.
New World shares had already been suspended due to the proposed reverse takeover, but remained suspended even after the deal collapsed because Beaumont had resigned, with all AIM-listed companies requiring an adviser to retain their listing.
New World Oil gave up hope on Friday, confirming its shares will be cancelled next Thursday, while still trying to remain optimistic about the future. The company said it had continued to investigate the transaction that led to its merger falling apart, while attempting to find a new nominated adviser to retain its listing.
"The company has been actively investigating the issue referred to above, however, no conclusion has yet been reached. Furthermore, it would not be appropriate to go into further detail, at this stage, as this may negatively impact any resolution which would not be in the interests of shareholders," said New World Oil.
"The company has also sought to appoint a nominated adviser as required by the AIM rules and to see if there was any possibility of retaining the company's listing. However, this has not proved to be possible. The company's shares are therefore expected to be cancelled from trading on AIM with effect from November 10, 2016," added the company.
"Notwithstanding the fact that the company will no longer be listed, going forward, the board will be focused on both creating value within the company and returning this value to shareholders," New World Oil said.
The only asset left in New World Oil's portfolio is the cash in the bank and the loan that it provided to Big Sofa, which it has not yet called in.
"Various options are being considered with regard to this loan and the transaction costs incurred to date which could ultimately be beneficial to the company. Furthermore, as an unlisted company there is greater scope to reduce costs in order to conserve value," said New World Oil.
"The board plans, in due course, to provide more details of the possible strategic direction of the company and to seek the approval of shareholders for such a plan," said the company.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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