SOLO.L Regulatory News (SOLO)

 29 June 2020

Solo Oil plc

("Solo" or "the Company") 

US$5,000,000 Investment Facility

Transaction Highlights

· Solo Oil plc has entered into an investment facility for up to US$5,000,000 with Prolific Basins LLC, a specialist investor; 

· Tranched investment structure that allows the Company to have a flexible funding option in place, should it be required, for the planned appraisal programme on its Ntorya gas field in Tanzania and for general working capital purposes;

· Company to immediately draw an initial US$500,000 under the investment facility;

· Further to the Company's recent update on its financial position, securing the investment facility further strengthens Solo's optionality regarding its existing natural gas portfolio and its business development work; and

· Structure is beneficial as provides a staged funding facility which can be drawn as required for the work programme and potentially minimises dilution to existing shareholders.

Solo (AIM: SOLO), the AIM investing company targeting attractive production and development opportunities within the European gas market, is pleased to announce the entry into a share subscription deed (the "Subscription Deed") with Prolific Basins LLC (the "Subscriber"), a U.S.-based specialist energy focused investor.

Pursuant to the Subscription Deed, in the coming days, the Subscriber will make an investment of US$500,000 (the "First Closing"), by way of an initial subscription for new ordinary shares of 0.2p each in the Company (the "Ordinary Shares"). The Subscriber will pay for these Ordinary Shares at First Closing and it is expected that First Closing will take place in the next seven days.

Provided the Company satisfies certain conditions set out in the Subscription Deed, an additional investment of US$500,000 will be made by the Subscriber following the Company's next annual general meeting, and a further US$1,000,000 may be invested within the next 12 months. The Subscriber may invest a further additional US$3,000,000, with the consent of the Company only, for a total of US$5,000,000, in the aggregate, under the Subscription Deed. Further information regarding the investment facility is set out below.

The proceeds from investment rounds will be used by the Company to fund the planned appraisal programme on its Ntorya gas field in Tanzania and for general working capital purposes, while the Company continues to progress the sales process of its interest in Tanzania.

Commenting on the facility, CEO Tom Reynolds said:

"We are pleased to be able to secure an appropriate funding structure that allows the Company maximum flexibility to progress the activity and deliver value for shareholders. Particularly ahead of a major drilling campaign such as that planned for the Chukumbi-1 well in Tanzania in H1 2021. The Company remains wholly committed to realising value from its interests in Tanzania and is encouraged by the interest received in its assets since commencing that sales process. We are however cognisant of the challenges being faced by the sector presently and therefore feel it is necessary to secure this funding now as it provides significant optionality and strengthens our hand with regards to any future negotiations in the knowledge that we can continue to fund our position of this exciting development if we do not receive offers that reflect our inherent value within our Tanzanian portfolio. We thank Prolific for their support and look forward to working with them."

Further detail

Each investment under the Subscription Deed will be made by the Subscriber by way of prepayment for Ordinary Shares to be issued, at the Subscriber's request, in single or multiple tranches, within 24 months of the date of the investment (the "Investment Shares"). The number of Ordinary Shares to be issued as settlement for each investment will be determined by dividing the gross subscription amount (or a part thereof) by the average of the five daily volume-weighted average prices during a specified period immediately prior to the selected date of issuance of the Ordinary Shares, rounded down to the next one fiftieth of a pence (the "Subscription Price").

At the First Closing, the Company will issue 9,800,000 Investment Shares to the Subscriber, in consideration of an additional payment of £19,600 by the Subscriber, with the balance of the shares to be issued as set out above. These shares issued at the First Closing may be applied against the ultimate number of shares to be issued to the Subscriber under the Subscription Deed, or alternatively the Subscriber will make an additional payment to the Company, dependent on the price of Company shares at the end of the term of the Subscription Deed. The Company has applied for admission of these shares to trading on AIM, and admission is expected to become effective at 8.00 a.m. on 2 July 2020. On admission, these shares will rank pari passu with the Ordinary Shares.

The Company will also issue to the Subscriber 6,005,681 Ordinary Shares by way of a fee. The Company has applied for admission of these Ordinary Shares to trading on AIM, and admission is expected to become effective at 8.00 a.m. on 2 July 2020. On admission, these shares will rank pari passu with the Ordinary Shares. The Company has agreed that it will issue 12,500,000 warrants with an exercise period of 24 months from the date of issue (the "Warrants") to the Subscriber entitling it to subscribe for one Ordinary Share per Warrant at the exercise price equal to £0.0166 (representing an approximately 58% premium over the current market price). The Warrants will be issued on customary terms.

As between the Company and the Subscriber will have the right, but not the obligation, during the period beginning on the date of First Closing and ending on the date no later than 7 business days after the Company's next annual general meeting, to obtain further investment from any of the Company's directors, shareholders of the Company holding more than 250,000 Ordinary Shares as at today's date and their respective affiliates in an aggregate amount not to exceed US$500,000 and on substantially the same terms as the Subscription Deed.

Application will be made to the London Stock Exchange for future Ordinary Shares issued and allotted under the Subscription Deed or on exercise of the Warrants to be admitted to trading on AIM. Such Ordinary Shares will only be issued to the extent that the Company has corporate authority to do so.

Restrictions agreed by the Company

For the duration of the Subscription Deed, the Company has agreed not to undertake certain actions without the Subscriber's written approval (e.g. to change the nature of its business or to incur indebtedness that ranks senior to or pari passu with the present financing).

Further, so long as there are amounts outstanding to the Subscriber, the Company has given certain customary undertakings in respect of its share capital, including not to modify the rights attaching to Ordinary Shares or to reduce its share capital and to ensure that the Company retains sufficient share allotment authorities at all times.

Restrictions agreed by the Subscriber

The Subscriber is contractually precluded from short-selling the Ordinary Shares or undertaking certain other prohibited activities in relation to the Ordinary Shares.

Following the admission to trading on AIM of the 15,805,681 new Ordinary Shares to be issued as noted above, the Company will have 647,509,807 Ordinary Shares in issue with each Ordinary Share carrying the right to one vote. There are no Ordinary Shares currently held in treasury. The total number of voting rights in the Company is therefore 647,509,807 and this figure may be used by shareholders as the denominator for the calculations by which they determine if they are required to notify their interest in, or a change to their interest in, the Company under the Disclosure Guidance and Transparency Rules.

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