LONDON (Alliance News) - President Energy PLC Wednesday said it has finalised its proposal to restructure its loan facility and its plans to conduct a subscription of shares with the aim of reducing its debt pile and interest payments.
The company is aiming to restructure its unsecured loan facility with IYA Global Ltd. The current outstanding amount is USD11.1 million and under the restructuring proposals it aims to reduce this to USD7.1 million by re-designating USD4.0 million of debt into an unsecured convertible loan note.
That loan note will expire at the end of April 2017 and carry a 10% per year interest rate and IYA Global will have the ability to convert the loan notes into shares for a 30% premium of 7.075 pence per share, the closing price of President shares on Monday.
That would give IYA Global a conversion price of around 9.19 pence per share.
President shares were trading up 0.9% to 6.99p per share on Wednesday morning.
Its proposals will lead to a significant reduction in debt and interest costs and once completed, the overall debt facility will be reduced to USD10.0 million from the current limit of USD15.0 million, with the final payment date being extended to the end of April 2017, the same deadline as the loan notes are set to carry.
"We are pleased with the support shown from our leading shareholders in connection with this transaction. The loan restructuring and equity subscription places the company on a firm financial platform to deliver its strategy and realisation of value. The existing shareholder loan with IYA has served as a financial backstop for the company but needed to be resized to balance the capital structure of the company in this lower oil price environment," said Chief Executive Peter Levine.
In addition, President proposed raising USD5.0 million through the non-brokered subscription of 45.8 million new shares at 7.075p per share.
The proceeds of the subscription will be used as working capital and provide more flexibility to achieve the "best value possible" for shareholders with regards to its farm-out process for Argentina and Paraguay, while targeting implementing its workover programme in Argentina to increase production.
Under the subscription, PLLG Investments Ltd, which is owned by President Chairman and Chief executive Peter Levine, has agreed to subscribe for 24.5 million new shares in a deal worth USD2.7 million, over half the entire shares on offer.
Following the subscription, Levine will own a beneficial holding of 117.3 million President shares, which represents a substantial 22.3% stake in the company.
Once the subscription has bee completed, President said it will seek shareholder approval to complete the loan restructuring. It will have to seek approval because converting the USD4.0 million of debt into the convertible loan note will exhaust the directors' existing authorities to allot shares and grant rights to subscribe for or convert securities into shares for cash on a non pre-emptive basis.
"As such, the re-designation and transfer of certain amount of the loan facility to the convertible loan is expected to be conditional upon shareholder approval being given at a general meeting of the company. A circular containing a notice convening such general meeting will be dispatched to shareholders accordingly," it said.
That meeting will be held on November 24.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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