Bowleven PLC's (AIM:BLVN) market value collapsed in Tuesday’s early deals as it revealed investors face dilution from a "very substantially" discounted share sale.
It comes as the company is rapidly running out of money whilst a protracted third-party asset sale remains up in the air.
In London, Bowleven stock dropped more than 60%, losing 1.15p to trade at 0.65p per share.
Privately owned Anglo-French independent oil and gas firm Perenco agreed to buy New Age’s 37.5% stake and operatorship of the Etinde project, offshore Cameroon, over a year ago though a number of key conditions to completing the deal remain outstanding – including a necessary approval by Cameroon’s state oil company, SNH.
These conditions have remained outstanding for a significant period and it remains uncertain when a decision will be made by SNH or whether it will approve the transaction, Bowleven said.
In the meantime, Bowleven sees no traction for its 25% interest in the project which is now materially its only asset.
Dwindling cash of US$1.25 million is projected to last until the end of the first quarter of 2024, assuming no additional spending is needed at Etinde in the meantime.
The company, in July, sought funding options.
Bowleven today told investors it had originally expected the Perenco transaction to complete “substantially earlier” and that the “extended delay with no established timeline” has now created uncertainty among its investors over potential additional risks associated with the Etinde project.
As a result, it said it is now “considering a fundraising proposal from a shareholder which contemplates the shareholder providing equity capital at a very substantial discount to the current market price of Bowleven's ordinary shares, whilst allowing all current shareholders to participate at the same price”.
It noted that the fundraising process is not yet at an advanced stage and there can be no certainty that a fundraising will be concluded.