(Alliance News) - Challenger Energy Group PLC on Thursday said it has entered into a binding agreement that will see Charlestown Energy Partners LLC become one of the largest shareholders.
Challenger, a Caribbean and Atlantic focused oil and gas company, is set to receive GBP1.5 million from the New York investment firm to begin technical work at the Area Off-3 licence off the coast of Uruguay.
Challenger Chief Executive Officer Eytan Uliel said: "Charlestown's investment in Challenger Energy will initially be as a loan, but once the Chevron Area Off-1 farm-in closes and we have completed a necessary share consolidation that loan will convert at a premium into an approximately 8.7% shareholding, and Charlestown will become a major shareholder in our company."
Converting at a fixed price of 0.168 pence per share, the loan will convert at a premium of approximately 20% based on the current share price.
Challenger shares were up 8.2% at 0.14 pence each in London on Thursday afternoon.
"Charlestown's investment ensures the company's ability to commence technical work on Area Off-3 at the earliest opportunity by underpinning the licence requirement to place cash on restricted deposit," the company said.
Once the Area Off-1 licence farm-out to Chevron is complete, Challenger will receive USD12.5 million and thereafter is expected to be fully funded for the foreseeable future.
Furthermore, as part of the agreement Charlestown's Managing Member Robert Bose will be joining Challenger's board once funding is advanced at a date anticipated in May.
By Elijah Dale, Alliance News reporter
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Challenger Energy (CEG)