LONDON (Alliance News) - Ithaca Energy Inc shares rose on Friday after it said it has executed an investment agreement with DKL Investments Ltd, part of Delek Group Ltd, which will result in USD66.0 million being injected into Ithaca.
Ithaca shares were up 10% to 49.08 pence per share on Friday.
Ithaca said under the agreement, it has issued 81.9 million Ithaca shares to DKL at a price of CAD1.05 per share, equivalent to 53.0 pence per share, to raise the USD66.0 million. That means DKL, and therefore Delek, will hold a 19.9% stake in Ithaca following the deal.
Delek is an Israeli-listed conglomerate with "significant natural gas exploration and production activities" in the Levant Basin in the Eastern Mediterranean.
"We are pleased to have secured Delek's investment in the company at a significant premium to the prevailing share price at this time of uncertain oil prices. The investment provides a solid vote of confidence in the long term value of Ithaca by a successful oil and gas investor and provides additional flexibility to execute the financial and strategic priorities of the business," said Chief Executive Les Thomas.
Due to the considerable stake it will hold and due to the terms of the agreement, Delek will appoint two non-executive directors to Ithaca's board, if the deal is approved by the Toronto stock exchange, London stock exchange and AIM. Ithaca is hoping to complete the deal before the end of next week.
"Investment proceeds will be used to strengthen the balance sheet, reduce bank debt and provide flexibility to pursue value-accretive satellite opportunities in the Greater Stella Area," the company added.
The Greater Stella Area is based in the UK North Sea, where Ithaca and its partners Dyas and fellow London-listed Petrofac Ltd are developing a substantial project.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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Petrofac (PFC)