NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, THE REPUBLIC OF SOUTH AFRICA OR JAPAN OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A BREACH OF THE RELEVANT SECURITIES LAWS OF SUCH JURISDICTION.
THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN COLUMBUS ENERGY RESOURCES PLC. THIS ANNOUNCEMENT DOES NOT CONSTITUTE OR CONTAIN ANY INVITATION, SOLICITATION, RECOMMENDATION, OFFER OR ADVICE TO ANY PERSON TO SUBSCRIBE FOR, OTHERWISE ACQUIRE OR DISPOSE OF ANY SECURITIES OF COLUMBUS ENERGY RESOURCES PLC IN ANY JURISDICTION IN WHICH ANY SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL.
15 October 2018
COLUMBUS ENERGY RESOURCES PLC
("Columbus" or the "Company")
Conditional placing to raise up to approximately £2.5 million
Acceleration of growth strategy
The Board of Columbus, the oil and gas producer and explorer focused on onshore Trinidad with the ambition to grow in South America, is pleased to announce a conditional placing, by VSA Capital Limited ("VSA"), with new and existing shareholders including Schroder Investment Management Limited ("Schroders"), Michael Joseph and Burggraben Holding AG ("Burggraben"), of 71,428,571 new ordinary shares in the share capital of the Company (the "Placing Shares") at a price of 3.5 pence per Placing Share (the "Placing Price") to raise approximately £2.5 million (before expenses) (the "Placing"), subject to approval by shareholders at a General Meeting proposed to be held on 2 November 2018.
· Conditional Placing of Placing Shares at 3.5 pence per Placing Share to raise approximately £2.5 million (before expenses);
· The Placing Price represents a discount of approximately 6.67% to the Closing Price on Friday 12 October 2018, the last trading day prior to this Announcement;
· The Board intend to use the net proceeds of the Placing to:
o Repay the North Energy Capital AS loan facility ("North Energy Loan") in the sum of US$1.25 million (instead of the intended drawdown from the 2018 Lind Facility which was referred to on 10 October 2018 in the Company's Business, Operational and Financial Update);
o Establish and implement a multi-well drilling campaign on the Steeldrum assets and also in the South West Peninsula ("SWP") - driven by value and "best bang for our buck"; and
o Upgrade facilities in the South West Peninsula, particularly at Bonasse and Icacos, to speed up oil production growth and sales and also allow for early sales from any exploration success at the SWP in 2019.
· The Placing is conditional upon the passing by Shareholders of a special resolution to waive pre-emption rights on the issue of the Placing Shares (the "Resolution") at a General Meeting of the Company to be held on 2 November 2018; and
· Dealings in the Placing Shares issued pursuant to the Placing are expected to commence at 8.00 a.m. on 5 November 2018.
Leo Koot, Executive Chairman of Columbus, commented:
"With the completion of the Steeldrum transaction, Columbus now has a diverse production base and multiple, large exploration prospects. This is despite the legacy issues we have faced over the last year, which have made a dent in our funds earmarked for further development and have slowed our pace of growth.
"Today's announcement follows strong market interest from two of our major shareholders who approached us late last week to provide the additional capital needed to fund an accelerated growth strategy. It also introduces a new institutional shareholder to our share register, Burggraben, whose principals visited our operations in Trinidad with our Board for a few days in August 2018. The placing provides us with the financial flexibility to pay off the North Energy Loan, thereby simplifying and strengthening our balance sheet. As a result, we will no longer need to drawdown on the 2018 Lind Facility to repay the North Energy Loan. Our major shareholders were keen to stress that they would rather see the monthly repayments, that would have been required to have been made on that Lind loan if it had been drawn-down, being invested in more value-adding opportunities in our operations.
"Columbus can now establish and accelerate a multi-well drilling campaign on the Steeldrum assets, capitalising on the optionality the acquisition of Steeldrum grants us, and also bring forward activities in the South West Peninsula region. From these assets, and our ongoing other work programmes previously announced, I believe we can make some very strong, quick returns on very little capex.
"We are grateful for the long-term support from our shareholders and are delighted to welcome Burggraben, who expressed a willingness, after their visit to our operations in Trinidad, to invest in Columbus when the right opportunity arose. We remain committed to the further creation of value for all invested in Columbus and are confident that today's placing provides us with the springboard to deliver additional production growth that will in turn be reflected in our cash flow and the share price which, in turn, rewards everyone, including myself and the management team, who are still effectively using half their salary to buy equity on a monthly basis at 5.1p per share."
Background to and reasons for the Placing
2018 has been a year of significant development and progress for the Company. The completion of the acquisition of Steeldrum Oil Company Inc ("Steeldrum"), has been a material step in the growth of the Company and establishes a very solid base for our Trinidad operations.
The Company now has a large, well balanced portfolio of assets across the south and south-west of Trinidad. The portfolio includes low-risk but highly prospective exploration opportunities in the South West Peninsula, a development project in Cory Moruga and 5 producing oilfields (Goudron, Innis Trinity, South Erin, Bonasse and Icacos). This provides the Company with an excellent opportunity to exploit our existing and new assets through operational excellence and also grow organically through exploration and the Cory Moruga development project. We will now focus on growing production and revenues in Innis Trinity and South Erin through the adoption of a similar operational strategy to our existing fields.
The Company reported in its Business, Financial and Operational Update (Q3 2018) on 10 October 2018, that Columbus planned to drawdown US$1.25 million from the 2018 Lind Loan, announced on 13 July 2018 alongside the announcement of the Steeldrum acquisition, to repay a US$1.25 million loan which Steeldrum holds with North Energy Capital AS ("North Energy and "North Energy Loan"). The planned drawn-down under the 2018 Lind Facility, which was specifically envisaged within the 2018 Lind Facility when it was established, would require repayments to Lind by the Company over a two-year period at approximately US$62,750 per month.
The Company would rather invest an equivalent amount in more value-adding operational and business opportunities. In addition, the Company wishes to improve its balance sheet by reducing its outstanding loan position and has been seeking a more efficient means of repaying its loans and also introducing additional capital for new growth opportunities. Recent discussions with two of the Company's major shareholders, Schroders and Michael Joseph, as well as with the principals of Burggraben, indicated a willingness by those investors to provide a combined total of £2.5 million of funds via the Placing to enable these objectives to be achieved.
Use of Proceeds
The Board believes that the Company has an excellent opportunity to capitalise on its producing and exploration assets in Trinidad and to accelerate its growth in to South America. It is the Board's intentions that the net proceeds of the Placing (amounting to approximately £2.365 million) will provide the Company with the capital required to not only pay off the North Energy Loan but also to continue to enhance its well-balanced portfolio of assets in Trinidad. The Board therefore intends to use the net proceeds of the Placing to:
· Repay the North Energy Loan in the sum of US$1.25 million;
· Establish and implement a multi-well drilling campaign on the Steeldrum assets and also in the SWP - driven by value and "best bang for our buck"; and
· Optimise facilities in the SWP, particularly at Bonasse and Icacos, to speed up oil production growth and sales and also allow for early sales from any exploration success at the SWP in 2019.
Details of the Placing
Pursuant to the Placing, the Company is seeking to raise approximately £2.5 million through the issue of 71,428,571 new ordinary shares in the share capital of the Company at a price of 3.5 pence per Placing Share.
The Placing will be conditional upon the passing of the Resolution at a General Meeting of Shareholders intended to be held on 2 November 2018. The Resolution is needed authorise the Directors to allot the Placing Shares on a non pre-emptive basis. This authority will not extend beyond the Placing Shares. Further details on the Resolution will be set out in the Circular (as defined below).
Application will be made for the Placing to be admitted to trading on the AIM market ("AIM") of London Stock Exchange, ("Admission"), and it is expected that Admission will become effective and that dealings will commence in the Placing Shares at 8.00 a.m. on 5 November 2018.
The Ordinary Shares to be issued pursuant to the Placing will rank pari passu with the Existing Ordinary Shares.
Schroders is a substantial shareholder of the Company as defined in the AIM Rules for Companies ("AIM Rules"). As such, Schroders is a "related party" pursuant to the AIM Rules and the proposed Placing of 21,428,571 Placing Shares to Schroders is therefore a related party transaction for the purposes of Rule 13 of the AIM Rules. The Directors consider, having consulted with Beaumont Cornish, the Company's nominated adviser, that the terms of Placing are fair and reasonable insofar as the Company's shareholders are concerned.
VSA is acting as Financial Adviser and Broker to the Company in connection with the Placing.
Total Voting Rights
Should the Resolution be passed and upon completion of the Placing, the Company's new issued share capital will consist of 830,881,192 ordinary shares with a nominal value of 0.05p each, with voting rights ("Ordinary Shares"). The Company does not hold any shares in Treasury. Therefore, the total number of Ordinary Shares in the Company with voting rights will be 830,881,192.
Notice of General Meeting
The Placing will be conditional upon the approval of the Resolution by Shareholders at the General Meeting to be held at the offices of VSA Capital Limited, New Liverpool House, 15-17 Eldon Street, London EC2M 7LD at 11.00 a.m. on 2 November 2018. A circular to shareholders (the "Circular") containing a notice of General Meeting and proxy card will be posted to shareholders no later than 17 October 2018 and will be available on the Company's website https://Columbus-erp.com
Importance of vote
Shareholders should be aware that, if the Resolution is not approved at the General Meeting, the net proceeds of the Placing will not be received by the Company.
The Directors consider that the Placing is in the best interests of the Company and its Shareholders and is most likely to promote the success of the Company for the benefit of the Shareholders as a whole. Accordingly, in the Circular, the Directors will unanimously recommend that Shareholders vote in favour of the proposed Resolution, as they intend to do in respect of their holdings amount to an aggregate of 2,688,366 Ordinary Shares, representing approximately 0.35% of the Company's Existing Ordinary Shares.
Columbus Energy Resources plc
Leo Koot / Gordon Stein
+44 (0)20 7203 2039
VSA Capital Limited
Financial Adviser and Broker
Andrew Monk / Andrew Raca
+44 (0)20 3005 5000
Beaumont Cornish Limited
Roland Cornish / Rosalind Hill Abrahams
+44 (0)20 7628 3396
Public and Investor Relations
Georgia Edwards / James Crothers
+44 (0)20 3757 4983
Notes to Editors:
Columbus Energy Resources Plc is an oil and gas producer and explorer focused on onshore Trinidad with the ambition to grow in South America. The Columbus Energy group has five producing fields, one development project and a highly prospective exploration portfolio in the South West Peninsula, which lies in the extreme southwest of Trinidad and consists of stacked shallow and deep prospects.
Columbus is cashflow positive from operations and aims to create transformational growth by developing its portfolio in a capital efficient and disciplined manner.
Columbus is guided by the following core values; safe and sustainable, stronger together, creative excellence, positive energy, totally trusted and personally responsible.
The Company is led by an experienced Board and senior management team with supportive shareholders and intends on leveraging its expertise and experience to build an attractive and diversified portfolio of assets across South America in order to build an oil production led South American exploration business.
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014 ("MAR"). In addition, market soundings (as defined in MAR) were taken in respect of the Placing with the result that certain persons became aware of inside information (as defined in MAR), as permitted by MAR. This inside information is set out in this Announcement. Therefore, those persons that received inside information in a market sounding are no longer in possession of such inside information relating to the Company and its securities.
To the extent that this Announcement contains certain forward-looking statements with respect to certain of the Company's plans and its current goals and expectations, a number of risks and uncertainties exist. The Company cautions readers that any forward-looking statement is no guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statements.
A forward-looking statement can be identified by the fact that it does not relate only to historical or current facts. Forward-looking statements sometimes use words such as "expect", "intend", "believe" or other words of similar meaning. Examples of forward-looking statements include, amongst others, statements regarding or which make assumptions in respect of the planned use of the proceeds of the Placing and plans and objectives for future operations and any other statements that are not historical fact.
By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances including, but not limited to, economic and business conditions, the effects of continued volatility in credit markets, market related risks such as changes in interest rates and foreign exchange rates, the policies and actions of governmental and regulatory authorities and changes in legislation. A number of these factors are beyond the Company's control. As a result, the Company's actual future results may differ materially from the plans, goals and expectations set forth in the Company's forward-looking statements.
Any forward-looking statement made in this Announcement by or on behalf of the Company speaks only as of the date it is made. These forward-looking statements reflect the Company's judgement at the date of this Announcement and are not intended to give any assurance as to future results. Except as required by the Financial Conduct Authority, the London Stock Exchange plc, the AIM Rules or applicable law, the Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this Announcement to reflect any changes in the Company's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.
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