(Alliance News) - Independent Oil & Gas PLC said Monday its main creditor, London Oil & Gas, has decided to convert two GBP10 million loan facilities into a 30% interest in the company and further loan notes.
London Oil & Gas converted a GBP10 million loan principle, signed in early 2016, into a 30% holding in Independent Oil & Gas.
London Oil & Gas will also exchange the balance of the 2016 loan into long-term, unsecured, non-interest bearing loan notes convertible at 8 pence. These Series A loan notes will be converted following the completion of Independent's farm-out process for half of its southern North Sea assets, expected in September.
Assuming the completion happens in September, the principal and accrued interest is expected to be about GBP10.8 million. About GBP9.4 million of the 2016 loan will be converted into 117.0 million with the remaining GBP1.4 million to be exchanged into Series A loan notes, expected to be converted into 17.7 million shares at a later date.
London Oil & Gas will also exchange the principal and accrued interest of a loan signed in early 2018 into long-term, unsecured, non-interest bearing loan notes convertible at 19 pence, or Series B loan notes. The principal and accrued interest for 2018 loan is expected to be about GBP11.4 million, which will be converted into 60.1 million shares.
Independent has also indicated it will repay London Oil & Gas's full non-convertible GBP16.6 million debt in the company once the farm-out process has completed.
"This conversion and restructuring of the LOG facilities is an important step in the process of completing our announced farm-out transaction and reaching final investment decision," said Chief Executive Andrew Hockey. "These steps simplify and clarify our capital structure and LOG's relinquishment of security will enable us to undertake our intended bond issue. Upon completion, the bond is intended to be the company's sole long-term secured debt."
Shares in Independent Oil & Gas were 0.4% higher in London on Monday at 19.38 pence each.