LONDON (Alliance News) - San Leon Energy PLC shares fell on Monday after it proposed a conditional placing and share capital reorganisation which would significantly enlarge the share capital of the company to raise GBP29 million.
San Leon shares were down 15% to 0.985 pence per share on Monday morning.
The company said the proposed placing is subject to shareholder approval at an extraordinary general meeting that will be announced shortly and will only go ahead if the company undergoes a share capital reorganisation consisting of subdivision and consolidation of the the existing issued share capital resulting in new shares in the company, it said in a statement.
The placing of 36.3 million new shares at a price of 80.0 pence per share, equivalent to 0.8 pence per existing share before the share capital reorganisation, will increase the share capital of the company by just under 2.4 times its existing size.
San Leon's current market capitalisation is GBP25 million.
Brandon Hill Capital Ltd is acting as the bookrunner and broker to the placing.
San Leon said it wants to conduct the placing to allow it to retain the Barryroe asset offshore Ireland rather than monetising it to fund operations, develop the Rawicz and Siekierki fields, enable commitment wells to be drilled onshore Morocco and in Albania and to fund any potential acquisitions that would enhance the value of the company.
"The funds will help transform San Leon into a cash-generating producer, and will bring other assets towards development. The three existing assets expected to generate cash in the coming years, Rawicz, Siekierki and Barryroe, will be the foundation for significant growth and the creation of shareholder value," said the company.
San Leon continues to review its cost base, but said this will not affect "the core business".
Through the proposed placing, Toscafund Asset Management LLP, which currently holds a 22% stake in San Leon, has entered into a conditional placing commitment for GBP16 million of the GBP29 million placing. That will take Tosca's shares to 41.5% following the placing.
"We are very grateful for the strong support of the existing and new investors in the placing. In particular, the proposed significant increase in Tosca's interest speaks volumes about their belief in the company's future and growth prospects," said Chairman Oisin Fanning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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San Leon (SLE)