President Energy (LON:PRES) has revealed plans for a restructuring of the group’s finances, which will include a US$5mln share subscription.
New debt arrangements will see the group’s current loan with IYA Global reduced to US$7.1mln from US$11.1mln, via the re-designation of US$4mln into a separate loan that can be converted into equity by the end of April 2017.
The new convertible loan will be unsecured, will carry a lower rate of interest (10%) and will be convertible into new President shares at a price of 9.198p, which is a 30% premium to Tuesday’s closing share price of 7.075p.
Subsequently, the existing loan facility, which had US$11mln drawn of a possible US$15mln, will be reduced to a cap of US$10mln (of which US$7.1mln will be drawn).
President also proposes to raise US$5mln of new equity which is aimed at improving its working capital position and to provide greater flexibility as it advances farm-out processes for its projects in Argentina and Paraguay.
Peter Levine, President’s executive chairman, chief executive and largest shareholder (with 19%) intends to participate in the proposed share placing.
IYA Global is beneficially owned by Levine.
The directors of President Energy, excluding Levine, having consulted the company’s nominated advisor RBC Capital Markets consider the terms of the refinancing to be fair and reasonable as far as the company's shareholders are concerned.