Tower shores up working capital as it works on Cameroon financing

(Sharecast News) - Africa-focussed oil and gas company Tower Resources has agreed a six-month, $0.5m (£0.37m) loan facility with Shard Merchant Capital, it announced on Tuesday, along with an extension to its Pegasus loan facility and a subscription, to cover its working capital.
The AIM-traded firm said the terms of the Shard facility include the issue of 31,446,541 attached three-year warrants at a strike price of 0.6p, and 5,761,198 shares to pre-pay interest.

It added that it had agreed a six-month extension to its existing $0.75m loan facility with Pegasus Petroleum, as part of which it will issue 47,169,811 attached three-year 0.6p warrants, with Pegasus agreeing to subscribe for 37,854,971 shares to convert the current accrued interest on the facility into shares, and to pre-pay interest.

The total number of shares to be issued in consideration of accrued and prepaid interest for the Shard and Pegasus facilities would be 43,616,169 shares, the board confirmed.

It also announced a subscription, agreed on 28 August, to raise gross proceeds of $0.2m through a subscription of 38,407,989 new shares at a price of 0.393p each, to clients of Shard.

The board said the purpose of the Shard facility, Pegasus extension and the subscription was to cover working capital while the company finalises funding arrangements for the drilling of the NJOM3 well on the Thali licence.

"We are pleased to have agreed this loan facility with Shard, which will provide us with working capital while we complete our asset-level financing for our Cameroon development, and to have made this small placing of shares," said chairman Jeremy Asher.

"I believe that shareholders already know that we are keen to avoid issuing more shares or warrants than necessary at the current share price.

"The new loan facility, and the extension of the existing one, will allow us to avoid issuing more than a small number of shares, and most of those new shares will also reduce our existing debt."

Asher said that, although the loans required the company to issue some warrants, they were at a "significant premium" to the current share price.

"Our intention is that both loan facilities will be repaid when we conclude our asset-level financing for Cameroon, which we are working on at present."

At 0848 BST, shares in Tower Resources were up 1.15% at 0.44p.