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UPDATE: Tower Resources' open offer a success, broker says

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-- Adds broker comment and share price reaction --

Tower Resources (LON:TRP) has received solid support for the open offer element of its recent fund raising exercise.

The company raised £9.0mln through a placing of shares at 1.125p and at the same time gave shareholders the opportunity to subscribe for shares at the same price. Up to £4.1mln in additional funds could have been raised had every shareholder taken up the full entitlement; in the end, the company raised an additional £1.04mln through the open offer.

Tower said it had received applications for shares from 43.5% of the number of registered qualifying shareholders.

“The take up is some way short of the maximum available in the open offer but with acceptances from 43.5% of registered holders and given the significant shareholders represented in the firm placing in terms of directors and major holders, can be considered a success,” Northland Capital Partners suggested.

At the time of the placing, the company said it did not need the extra funds from the open offer to finance its immediate exploration plans; however, Tower’s chief executive officer, Graeme Thomson, told Proactive Investors last month that enabling private investors to buy shares on the same terms as institutional backers was the right thing to do and an example “of shareholder democracy in action”.

Primarily, proceeds from the placing and open offer will cover Tower’s share of its costs this year for the Welwitschia-1 well off the coast of Namibia, where Spanish oil and gas giant Repsol is the operator.

“The company has in aggregate raised £10mln to enable its commitments for this year’s drilling programme and the completion of its Madagascan acquisition that will see its diversify its away from pure offshore Namibian exposure. All eyes for the subsector will be on HRT’s Murombe-1 well (PEL23) spud on 2nd August and expected to take around 55 days. This also has relevance for Serica Energy (SQZ.L BUY) and Chariot Oil and Gas (CHAR.L, BUY),” broker Northland said.

Shares in Tower were up 1.1% to 1.21p in mid-morning trade.

Quick facts: Tower Resources PLC

Price: 0.575 GBX

AIM:TRP
Market: AIM
Market Cap: £6.35 m
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