Hurricane Energy Plc (LON:HUR) has launched a US$520mln, comprising a US$300mln share placing and US$220mln convertible bond.
The new capital will finance the UK offshore moves Hurricane closer to producing from the large, undeveloped Lancaster oil field, in the West of Shetland region.
"This Fundraising facilitates the key to unlocking value on the company's wider portfolio: production and reservoir data that can only be acquired through long term production operation,” said Robert Trice, Hurricane chief executive.
WATCH: Cantor Fitzgerald's Sam Wahab on Hurricane Energy's 'very significant' $520mln fundraise
“Furthermore, the EPS is anticipated to generate returns at foreseeable oil prices.”
The new funding process will cover capital expenditure for the proposed Early Production System project (due for final investment decision before the end of 2017) which is targeting start-up in the first half 2019 with initial output of around 17,000 barrels of oil per day.
New shares will be sold at a price of 32p each, while the indicative terms of the concurrent convertible bond will see the debt carry interest between 7-7.5% per annum and be convertible to equity at a premium of between 22.5 and 27.5%.
Kerogen Capital, the private equity group and cornerstone shareholder in Hurricane, intends to subscribe for US$35mln of the new equity.
City brokers Cenkos and Stifel Nicolaus are running both the share placing and the convertible bond issue – the concurrent accelerated book-build processes are expected to be wrapped up be the end of Friday’s business.
Hurricane is also planning to open up the funding process to all shareholders, with a separate ‘follow-on’ funding process which will also price new shares at 32p each.
The announcement came after Thursday’s market close, which following an 8% rally saw Hurricane priced at 37p per share.