Tower Resources PLC (LON:TRP) has unveiled a financing which will see the extension and restructuring of its US$750,000 bridging loan facility of US$750,000 and gross proceeds of approximately £1,500,000 raised through a placing and subscription to provide it with working capital.
The AIM listed oil and gas company with its focus on Africa said the placing will see approximately 461.54 million new ordinary shares issued at a price of 0.325p per placing share with each participant also receiving one warrant exercisable for three years at 1p per share for every three shares subscribed.
The company added that it is intended that Jeremy Asher, its chairman and CEO, will subscribe for £700,000 of new ordinary shares as part of the placing.
Asher commented: "I am pleased to have received the support of new and existing investors in Tower and I hope my personal commitment to the Placing and Facility (including the latter's extension) serves as a demonstration of my own confidence in being able to develop the Thali license, on which we continue to talk with potential financing partners.
“With this financing being completed and the recent, albeit early-stage”, interest being shown by an oil major in our Namibian assets, I remain confident in the future prospects of the Company and look forward to updating the market with progress across our portfolio," he added.
Cameroon operations update
Tower Resources also announced that it has signed Letters Of Intent (LOIs) regarding the NJOM-3 well on the Njonji structure within its Thali license with both COSL, in respect of its Seeker jack-up drilling rig, as previously notified, and also Geoquip Marine, in respect of its MV Investigator technical services vessel.
The group said the MV Investigator, which is now in West Africa, can execute the site survey at Njonji, including boreholes to test the underwater soil consistency, which needs to be done before the drilling rig can be brought onto site.
The company added that its Tower Resources Cameroon subsidiary has applied to the Ministry of Mines, Industry and Technological Development for a further extension of the initial exploration period of the license to allow completion of the NJOM-3 well, and the company expects this extension to be granted on the execution of a firm contract in respect of the site survey.
Bridging facility restructuring
The bridging loan facility restructuring agreed with Pegasus Petroleum Ltd, a company beneficially owned by Asher, will see Pegasus advance further funds to the company as part of the facility to allow it to repay the other facility lenders their US$375,000 principal in full together with accrued interest, the group said.
Pegasus will then hold 100% of the facility, amounting to US$750,000 and the terms of the facility will be amended with the repayment date extended to 30 June 2020, and the threshold for preferential right of repayment from future financing raised to US$2.5 million in respect of any single fundraising and US$5 million in cumulative fundraising, it added.
Tower Resources said that, in consideration for the extension, it has been agreed that Pegasus will receive a possible additional consideration, contingent upon the company itself receiving cash flow arising from the Thali license, comprising a royalty of up to 10% of the contractor's share of production.
Placing in two tranches
The group noted that the placing will be undertaken in two tranches, with completion of the first tranche expected on or around 21 October 2019 and completion of the second tranche expected on or around 12 November 2019.
It pointed out that the placing has also been supported by a number of the company's existing large shareholders, including broker Peel Hunt which has subscribed for £250,000 of the shares.
The placing funds will allow the company to cover ongoing operational costs, pay creditors and also secure the services of Geoquip Marine's MV Investigator to undertake the site survey and drill boreholes, which is the final operational step needed prior to being able to bring the drill rig itself to the site.
In addition to the placing, the company expects to issue additional equity, comprising approximately 50,784,000 shares on the same terms and with the same attached warrants to some service providers in lieu of £165,048 fees either already accrued or to be accrued over the next six months.
Finally, as in previous quarters, the company has asked certain directors to accept warrants in lieu of a portion of their director fees, totalling £15,000 for the fourth quarter of 2019, in order to conserve the company's cash.
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