28 Aug 2009 07:00
ENEGI OIL PLC
Trading symbols:
London Stock Exchange: ENEG
Bourse de Luxembourg: GB00B29T9605
28 August 2009
Enegi Oil Plc
('Enegi' or 'the Company')
Placing
Enegi, the Newfoundland focused oil and gas company, today announces that it has conditionally placed 30,000,000 new ordinary shares at 5 pence each to raise approximately £1.5 million to fund the continued development of the Company. The Placing is not being underwritten.
A circular ("Circular") containing details of the placing is being posted to shareholders today and will be available on the Group's website: www.enegioil.com
Highlights
Placing of 30,000,000 ordinary shares at 5 pence raising approximately £1.5 million
Monies raised will be used to fund the continued development of the Company
Heads of agreement farm in signed with a third party for Port au Port ("PAP") No. 1 well, Garden Hill South
Under the terms of the farm in the third party will gain a 30% interest in PAP No.1 well for a maximum expenditure of C$2.5 million
A General Meeting will be held on 15 September 2009 in order to gain shareholder approval for the Placing
Alan Minty, CEO, commented:
"We are delighted with the support that we have received during this Placing. These transactions allow us to resolve the issues of the past few months and refocus on developing our oil and gas assets. I would like to thank all our staff who have worked tirelessly to achieve this and now look forward to moving the company ahead and developing our portfolio."
Background and details of the Placing
Since the disappointing announcements in February 2009 relating to the economic viability of the Group's Port au Port No. 1 well at Garden Hill South, the Company has continued to review its options with regard to its portfolio of assets. These options have included, but have not been limited to, exploring farm-out opportunities on its current assets and the expansion of its portfolio through the acquisition of additional projects. Enegi can announce today that its wholly owned subsidiary, PDI Production Inc ("PDIP"), is in advanced negotiations via a signed heads of agreement to conclude a farm-in at the Group's Port au Port ("PAP") No. 1 well, Garden Hill South. Under the terms of the farm-in, a third party will receive a 30 per cent. interest in the PAP No.1 well for a maximum expenditure of C$2.5 million (Canadian Dollars). The expenditure is expected to be used to initially log the well and then conduct a foam/acid fraccing operation which is anticipated to improve the production profile of the well. As a result of these actions, it is expected operations at Garden Hill South will resume in the short term.
Since February 2009, when PDIP informed the Company that it had liabilities in excess of its assets, the Company has worked tirelessly with PDIP to help reschedule payment of these liabilities. Earlier this month, PDIP informed the Company that it had been able to restructure the majority of its obligations to creditors so that that they will be repayable over the course of the next 12 months. PDIP remains in dispute with five of its creditors and is working to reach settlement with these parties as soon as possible.
On 3 November 2008 the Company announced that it had taken steps to initiate proceedings to exercise its rights under the security arrangement which it had in place with an institution which had not met its obligations under the placing at the time of the Company's admission to AIM in March 2008. The Company now has the ability to liquidate the security and intends to sell down the security to repay the majority of PDIP's liabilities to creditors. If, however, it is not possible to realise proceeds from this security in the timeframe the Directors expect, the Group will require additional resources or will need to renegotiate the payment arrangements with its creditors.
The Placing is being undertaken to raise finance for the continued development of the Company. This will include, but not be limited to, funding required to develop the PAP No. 1 well at Garden Hill South pursuant to a farm-in, further examination of the development opportunities for its other assets and it will also enable the Company to meet general working capital requirements.
The Company has conditionally raised £1.5 million before expenses (£1.47 million net of expenses) through the proposed issue of the Placing Shares at the Placing Price. In addition to the Placing Shares, the Company is also issuing the RMRI Consideration Shares at the Placing Price to RMRI (which is controlled by Alan Minty, a director of the Company) in satisfaction of sums owed to RMRI by the Company. The RMRI Consideration Shares relate to invoices raised for services provided to the Group between January and July 2009 totaling £201,495.23. RMRI will also receive 5,000,000 Ordinary Shares in the Placing which, at the Placing Price, represent consideration for £250,000 already provided and committed to the Company by RMRI between July and August 2009 for working capital purposes.
The Placing Shares and the RMRI Consideration Shares will represent approximately 51 per cent. of the Enlarged Share Capital assuming that no options or warrants are exercised prior to Admission. The Placing Price represents a discount of approximately 42.9 per cent. to the closing mid-market price of 8.75 pence per Existing Ordinary Share on 27 August 2009, being the last dealing day prior to the publication of the circular.
Pursuant to the terms of the Placing Agreement, Cenkos Securities, as agent for the Company, has conditionally agreed to use reasonable endeavours to procure subscribers for the Placing Shares at the Placing Price. The Placing Agreement is conditional upon, inter alia, the Resolutions being duly passed at the General Meeting and Admission of the Placing Shares becoming effective on or before 8.00 a.m. on 16 September 2009 (or such later date as the Company and Cenkos Securities may agree, but in any event no later than 30 September 2009). The Placing Agreement contains provisions entitling Cenkos Securities to terminate the Placing Agreement at any time prior to Admission in certain circumstances. If this right is exercised, the Placing will not proceed. The Placing has not been underwritten.
The New Ordinary Shares will be issued credited as fully paid and will rank pari passu in all respects with the Existing Ordinary Shares including the right to receive all dividends and other distributions declared on or after the date on which they are issued.
Application will be made to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on AIM. It is expected that Admission will become effective and that dealings in the New Ordinary Shares will commence on AIM at 8.00 a.m. on 16 September 2009.
RMRI, which is controlled by Alan Minty, a director of the Company, will receive Ordinary Shares in the Placing and Issue:
| Number of Ordinary Shares received | Total holding post Placing and Issue | |
| RMRI | 9,029,904 | 9,029,904 |
The issuance of 5,000,000 Ordinary Shares in the Placing and of the RMRI Consideration Shares to RMRI, which is controlled by Alan Minty who falls within the definition of related parties in the AIM Rules for Companies, is deemed to be a related party transaction. The Independent Directors, having consulted with Cenkos Securities as the Company's Nominated Adviser, consider that the terms of this transaction are fair and reasonable insofar as the Company's Shareholders are concerned.
A General Meeting of the Company has been convened, to be held at 12:00 noon on 15 September 2009 at 58 Mosley Street, Manchester M2 3HZ, notice of which will be sent to Shareholders today.
Enegi Oil Tel: + 44 161 817 7460
Alan Minty, CEO
Cenkos Securities Tel: + 44 207 397 8900
Joe Nally
Stephen Keys
College Hill Tel: + 44 207 457 2020
Nick Elwes
Paddy Blewer
www.enegioil.com
The Company
Enegi Oil Plc is an independent oil and gas group whose objective is the identification, development and operation of hydrocarbon opportunities. The Group's current operations are focused on assets on and around the Port au Port Peninsula in Newfoundland, which, although lightly explored, is in an active petroleum system with light oil having previously been discovered there. The Group's assets include Garden Hill South, Shoal Point, Garden Hill Central, Garden Hill North and Lourdes.
DEFINITIONS
| In this announcement, the following expressions shall have the following meanings, unless the context otherwise requires: | |
| "Admission" | admission of the New Ordinary Shares to trading on AIM; |
| "AIM" | the market operated by the London Stock Exchange plc; |
| "AIM Rules for Companies" | the rules for AIM companies as issued by the London Stock Exchange plc, from time to time; |
| "Cenkos Securities " | Cenkos Securities plc; |
| "Company" or "Enegi" | Enegi Oil Plc; |
| "CREST" | the relevant system (as defined in the CREST Regulations) in respect of which Euroclear UK & Ireland Limited is the Operator (as defined in the CREST Regulations) in accordance with which securities may be held and transferred in uncertificated form; |
| "CREST Regulations" | the Uncertificated Securities Regulations 2001 (ST 2001 No. 3755); |
| "Directors" or "Board" | the directors of the Company; |
| "Enlarged Issued Share Capital" | the issued share capital of the Company following the Admission; |
| "Existing Ordinary Shares" | 31,304,715 Ordinary Shares in issue as at the date of the announcement; |
| "General Meeting" | the general meeting of the Company to be held at 12.00 noon on 15 September 2009, or any adjournment thereof, notice of which is contained at the end of the Circular ; |
| "Group" | Enegi and its subsidiaries; |
| "Independent Directors" | The Directors excluding Alan Minty who is participating in the Placing; |
| "Issue" | The issue of the RMRI Consideration Shares; |
| "New Ordinary Shares" | the RMRI Consideration Shares and the Placing Shares; |
| "Ordinary Shares" | ordinary shares of 1 pence each in the capital of the Company; |
| "Placing" | the conditional placing of the Placing Shares by Cenkos Securities at the Placing Price pursuant to the Placing Agreement; |
| "Placing Agreement" | the conditional agreement dated 27 August 2009 between the Company (1) and Cenkos Securities (2) relating to the Placing; |
| "Placing Price" | 5 pence per Ordinary Share; |
| "Placing Shares" | the 30,000,000 new Ordinary Shares to be issued pursuant to the Placing; |
| "Resolutions" | the resolutions to be proposed at the General Meeting as set out in the notice of General Meeting accompanying the Circular ; |
| "RMRI" | Risk Management Research Institute (RMRI) Limited and/or RMRI Management LLP, as the context so requires; |
| "RMRI Consideration Shares" | 4,029,904 new Ordinary Shares to be issued to RMRI at the Placing Price; and |
| "Shareholder" | a person who is registered as a holder of Ordinary Shares. |